NZD/USD Slips as Kiwi Pressured by Weak Trade, GDP Data

The NZD/USD pair slipped for a third straight day and traded near 0.5880 in Friday's Asian session. The Kiwi remained under pressure following New Zealand’s latest trade balance data, while the US dollar stayed stable, dragging the pair lower.

New Zealand Trade Balance Data

Market reports highlight that New Zealand’s trade deficit narrowed to NZD 2.99 billion in August 2012, compared with NZD 4.12 billion in July 2012. Exports fell to NZD 5.94 billion from NZD 6.56 billion, while imports slipped slightly to NZD 7.12 billion from NZD 7.27 billion.

Analysts suggest that the narrower deficit indicates weaker overall trade flows. Although both exports and imports declined, the sharper fall in exports had a more negative impact.

GDP Weakness Adds Pressure

Commentators note that New Zealand’s economy deteriorated in Q2, with GDP falling 0.9% quarter-on-quarter, in contrast to a 0.9% increase in Q1. On an annual basis, GDP shrank 0.6%, mirroring Q1’s decline.

These figures point to continued economic challenges in New Zealand, weighing on sentiment towards the Kiwi as traders reassess expectations.

USD/CAD Steadies as Fed Tone Counters BoC Rate Cut Pressures

USD/CAD held steady near 1.3800 in Friday's early European session. The US dollar gained support after the Federal Reserve struck a less dovish tone than markets expected, while attention turned to Canada’s upcoming retail sales data.

Federal Reserve Policy Outlook

Reports show the Fed reduced its benchmark interest rate to 4.00%-4.25% in September, marking the first cut of the year with a 25 bps reduction. Policymakers hinted at the possibility of two more cuts before year-end, depending on incoming economic data.

Fed Chair Jerome Powell described the cut as a risk management tool and downplayed urgency for further easing, lending short-term support to the US dollar.

Bank of Canada’s Dovish Surprise

In contrast, the Bank of Canada (BoC) lowered its main interest rate to 2.5%, the lowest in three years, and signaled room for further cuts. Analysts note this divergence with the Fed could pressure the Canadian dollar. However, higher crude oil prices may help support the Loonie, as Canada remains the top oil exporter to the US.

EUR/USD Slips Amid Jobs Data, Awaits German Inflation Impact

EUR/USD slipped to 1.1770 in Friday’s Asian session, marking its third straight day of losses. Strong US labour market data lifted the dollar, while traders awaited Germany’s Producer Price Index (PPI) report for fresh direction.

US Labour Market Resilience

The US Department of Labour reported Initial Jobless Claims fell to 231K in the week ending September 13, beating forecasts of 240K and below the prior week’s 264K. Continuing claims also declined by 7K to 1.92M, signaling stability in the labour market.

ECB Signals Caution

The euro remained weak following the Fed’s policy shift. However, European Central Bank officials, including Vice President Luis de Guindos, emphasized caution, noting that current rates remain appropriate given inflation and economic uncertainty. Other council members echoed a wait-and-see stance, keeping the door open for adjustments if conditions worsen.

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AUD/USD Gains Supported by Commodity Strength, Data Focus Ahead

AUD/USD traded near 0.6610, easing from a September 16 high of 0.6683. The pair has gained 6.8% year-to-date, supported by firm commodity prices and a stable domestic backdrop.

Commodities and RBA Outlook

Strong commodity demand has cushioned the Aussie dollar, while the Reserve Bank of Australia (RBA) remains focused on containing inflation without disrupting growth. Markets expect policy caution, with attention shifting to inflation and jobs data in the coming days.

Technical and Market Outlook

On the charts, analysts see support near 0.65, while resistance is around 0.67. Key data releases—such as Australian inflation figures and US jobless claims—are expected to shape short-term momentum in the AUD/USD exchange rate.