Forex - Kiwi gains after trade data, attention focused on Fed meeting

Investing.com - The New Zealand dollar gained on Wednesday after better than expected trade data with investors focused however on the upcoming rate announcement by the U.S. Federal Reserve expected to set a cautious tone on the timing of a widely expected rate hike this year.

New Zealand said its March trade balance reached NZ$631 million, well above the NZ$50 millio expected month-on-month.

NZD/USD traded at 0.7725, up 0.11%. USD/JPY changed hands at 118.86, flat, while EUR/USD fell 0.11% to 1.0969. AUD/USD was sharply lower at 0.7998, down 0.30%.

In Washington, U.S. president Barack Obama and Japan prime minister Shinzo Abe indicated they are deeply confident that a comprehensive trade agreement between the U.S. and nearly a dozen Asian-Pacific nations can be reached.

Overnight, the dollar pushed broadly lower against a basket of other major currencies on Tuesday, after data showed that U.S. consumer confidence deteriorated unexpectedly in April, fuelling concerns over the strength of the economy.

The dollar turned lower after the Conference Board reported that its consumer confidence index slumped to 95.2 in April, well below the forecast of 102.5 and down from 101.4 in March.

Inflation rate expectations were the lowest since February 2007.

The report said the deterioration in confidence was due to the recent lackluster performance of the labor market and apprehension about the short-term outlook.

The data came as investors were looking ahead to Wednesday’s Federal Reserve rate statement for further indications on the timing of a first rate hike by the central bank.

Recent disappointing reports on employment, retail sales and industrial production have prompted investors to scale back expectations for higher interest rates.

Earlier Tuesday data showed that U.S. home prices rose in February from a year earlier.

The S&P/Case-Shiller home price index rose by an annualized 5.0% in February, above forecasts for a reading of 4.7% and following a gain of 4.6% in January.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was flat at 96.19.

Overnight, the euro found support after Greek Prime Minister Alexis Tsipras reshuffled the team handling talks with the country’s international lenders, fuelling optimism that a deal will be reached by early May.