Investing.com - The New Zealand dollar moved higher against the U.S. dollar on Monday, as expectations for a rate increase by the Reserve Bank of New Zealand offset concerns over problems in some emerging market economies.
NZD/USD was last up 0.46% to 0.8251, recovering from lows of 0.8198, the weakest level since January 3.
The pair was likely to find support at 0.8177, the low of January 3 and resistance at 0.8312, Friday’s high.
The New Zealand dollar found support ahead of Thursday’s RBNZ rate review, with markets split on whether the central bank will raise rates at this meeting or the next, as inflation remains above forecasts.
Market participants were also looking ahead to the outcome of the Federal Reserve’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.
New Zealand’s dollar fell against the dollar and the yen on Friday as investors flocked to safe haven assets amid a broad based selloff in stocks and emerging market currencies.
The selloff in financial markets was triggered after data last week pointed to a steeper than expected slowdown in Chinese manufacturing, fuelling fears that weakness could spread to other emerging market economies.
Emerging market currencies have been hard hit since the Fed announced plans last month to begin scaling back its asset purchase program, while worries over political instability and the outlook for growth for some countries also weighed.
The New Zealand dollar recovered from six-week lows against the yen, with NZD/JPY up 0.64% to 84.57 from lows of 83.74.