Forex - NZD/USD slips to daily low as risk appetite

The New Zealand dollar slipped to a daily low against its U.S. counterpart on Tuesday, as disappointing U.S. manufacturing data added to concerns over the global economic outlook, curbing demand for higher yielding assets.

NZD/USD hit 0.8740 during late Asian trade, the daily low; the pair subsequently consolidated at 0.8745, shedding 0.22%.

The pair was likely to find support at 0.8621, Friday’s low and resistance at 0.8841, Monday’s high and the pair’s highest since exchange rate controls ended in March 1985.

Concerns over the global economic recovery lingered after a report on Monday showed that the U.S. Institute for Supply Management's Manufacturing Index fell to its lowest level in two years in July.

Investors also remained wary amid concerns that a deal to raise the U.S. debt ceiling would not be sufficient to prevent ratings agencies from downgrading the U.S. sovereign debt rating.

But the kiwi remained supported after domestic data showed that labor costs rose in line with expectations in the second quarter, indicating rising inflation and adding to expectations for a near-term interest rate hike by the Reserve Bank of New Zealand.

Meanwhile, the kiwi was higher against its Australian cousin, with AUD/NZD shedding 0.55% to hit 1.2446.

Earlier in the day, the Reserve Bank of Australia kept the benchmark interest rate unchanged at 4.5% for a record eighth straight meeting, citing “uncertainty” over the global economic outlook.

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Dollar broadly lower vs. rivals as debt vote looms

The U.S. dollar was broadly lower against its major counterparts on Monday, as hopes that the U.S. lawmakers would pass a deal to raise the country’s debt ceiling were tempered by concerns that the U.S. sovereign rating could still be downgraded.

During European afternoon trade, the greenback was lower against the euro, with EUR/USD rising 0.19% to hit 1.4424.

President Barack Obama and Senate leaders announced Sunday night that they had reached agreement on a framework deal that will cut spending and increase the USD14.3 trillion federal debt ceiling, in order to avert a U.S. default.

But the greenback was higher against the pound, with GBP/USD slipping 0.11% to hit 1.6406.

Earlier in the day, a report showed that manufacturing activity in the U.K. declined more-than-expected in July, the first time it has been below the 50-level that separates contraction from expansion since July 2009.

Meanwhile, the greenback was up against the yen but touched a fresh record low against the Swiss franc, with USD/JPY rising 0.22% to hit 76.92 and USD/CHF shedding 0.28% to hit 0.7834.

In addition, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.48% to hit 0.9508, AUD/USD rising 0.50% to hit 1.1049 and NZD/USD climbing 0.25% to hit 0.8814.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slipped 0.24% to hit 73.81.

Later in the day, the U.S. Institute of Supply Management was to publish data on manufacturing activity.

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