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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