Forex News: NZ Dollar Falls Amid Risk-off Mood

NZ Dollar Falls Amid Risk-off Mood

(RTTNews) - The New Zealand dollar weakened against other major currencies in the European session on Wednesday, as European stocks traded lower as oil prices remain elevated on growing concerns about prolonged disruptions to supply.

Brent prices held steady above $89 a barrel in Asian trade, after having soared nearly 12 percent over the previous five sessions as the U.S. and Iran remained at odds over reopening the Strait of Hormuz and Yemen's Iran-aligned Houthi forces launched fresh ballistic missile attacks on the Red Sea port city of AI-Makha.

Conflicting reports over diplomacy and Strait of Hormuz talks have hampered prospects for reopening the crucial waterway.

Pakistan's defense minister Khawaja Asif said the U.S. and Iran are close to "some sort of an arrangement" and that "things are shaping up again in favor of a peace arrangement or a deal."

On the contrary, fresh attacks on ships in the Strait of Hormuz and Bab el-Mandeb raised worries that disruptions to global crude supplies could persist.

U.S. forces fired on a Panama-flagged ship that attempted to run the American blockade of Iranian ports early Tuesday.

Shipping data showed traffic through the strait fell to just six vessels on Monday compared with a 10-day average of about 11 and roughly 125 to 140 vessels before the war.

As inflation worries mount, traders await a closely watched report on U.S. consumer price inflation later in the day for fresh insights into the Federal Reserve's next move.

The report is expected to show consumer prices inched up by 0.1 percent in July after falling by 0.4 percent in June. Core consumer prices, which exclude food and energy prices, are expected to rise by 0.2 percent in July after coming in unchanged in June.

Producer price inflation data is due on Thursday, followed by retail sales and consumer sentiment readings on Friday. Less than three months before the country's elections, Christopher Luxon, the prime minister of New Zealand, overcame a challenge from his defense minister in a vote of confidence on Wednesday. This further demonstrates the divisions within the ruling National Party.

In the European trading today, the NZ dollar fell to a 5-day low of 1.9684 against the euro and a 2-day low of 93.41 against the yen, from early highs of 1.9633 and 93.64, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.99 against the euro and 99.00 against the yen.

Against the U.S. and the Australian dollars, the kiwi dropped to a 1-week low of 0.5861 and a 2-week low of 1.2043, respectively. The kiwi may test support near 0.56 against the greenback and 1.21 against the aussie.

Looking ahead, U.S. MBA weekly mortgage approvals data, Canada building permits for June, U.S. CPI data for June, U.S. EIA crude oil data, U.S. WASDE report and U.S. monthly budget statement for July are slated for release in the New York session.

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