Investing.com - The New Zealand dollar was higher against the U.S. dollar on Tuesday, tracking gains in the Australian dollar as expectations for a rate cut diminished after data showed that business conditions rose to a two-and-a-half year high in December.
NZD/USD rose 0.53% to session highs of 0.8276, up from 0.8229 on Monday.
The pair is likely to find support at 0.8200 and resistance at 0.8312, Friday’s high.
The Australian dollar rose after National Australia Bank said its monthly business conditions index rose to four in December from a reading of minus three in November, as low interest rates, higher house prices and a weaker exchange rate boosted sales and profitability.
NAB’s separate business confidence index was unchanged at six in December.
The kiwi was also supported ahead of Thursday’s Reserve Bank of New Zealand rate review, with markets divided on whether the central bank will raise rates at this meeting or the next, as inflation remains above forecasts.
Investors were also anticipating Wednesday’s policy statement by the Federal Reserve amid expectations that the bank will cut its asset purchase program by another $10 billion. The Fed announced the first cut to its stimulus program in December.
Concerns over the impact of the Fed scaling back its stimulus program, along with fears over a possible slowdown in China fuelled a broad based selloff in emerging currencies in recent sessions.
Sentiment on emerging market currencies remained fragile ahead of an emergency meeting of Turkey’s central bank later Tuesday. Turkey’s lira spiraled to new lows against the dollar on Monday, sparking widespread risk aversion.
The New Zealand dollar was higher against the yen, with NZD/JPY advancing 0.77% to 85.04, but edged lower against the Aussie, with AUD/NZD inching up 0.08% to 1.0620.
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