NZ Dollar Drops Amid Rising Risk Aversion On Global Growth Concerns

The New Zealand dollar declined against its major opponents in the Asian session on Wednesday amid rising risk aversion, as continued worries about U.S.-China trade war rekindled worries about global economic growth.

Financial stocks fell following a decline in U.S. treasury yields, as investors fretted about the impact of trade war on global economy.

The Trump administration refrained from labeling China as a currency manipulator but repeated complaint that Beijing has weakened the renminbi to take advantage of the United States on trade.

China remains on the Treasury Department's monitoring list along with Germany, Ireland, Italy, Japan, Malaysia, Singapore, South Korea and Vietnam.

Survey results from ANZ showed that New Zealand business sentiment strengthened in May on firms' assessment about own activity.

The headline business confidence index rose by 6 points to net -32 percent in May.

Firms' expectations for their own activity lifted 2 points to a net 9 percent expecting a lift. Manufacturing was the most optimistic sector and construction was the least.

The kiwi declined to a 6-day low of 71.33 against the yen, from a high of 71.65 hit at 9:15 pm ET. If the kiwi drops further, 0.69 is possibly seen as its next support level.

Bank of Japan Governor Haruhiko Kuroda said Japan has difficulty in re-anchoring long-term inflation expectations from inflation below the target level and suggested examining how best to manage inflation expectations within the flexible inflation targeting framework.

Many advanced economies experience very sluggish price development despite significant improvement in economic activity, the banker said. This, in turn, raised concerns about the credibility of inflation targets.

After rising to 0.6552 against the greenback at 8:45 pm ET, the kiwi reversed direction and fell to a 5-day low of 0.6532. The kiwi is poised to find support around the 0.63 region.

The kiwi weakened to 1.7079 against the euro, after rising to a 9-day high of 1.7049 at 9:00 pm ET. The kiwi is seen finding support around the 1.73 region.

The kiwi slipped to a 6-day low of 1.0593 against the aussie, following a high of 1.0573 seen at 9:00 pm ET. The kiwi is likely to test support around the 1.07 region.

Looking ahead, German jobless rate for May is due in the European session.

In the New York session, the Bank of Canada announces its interest rate decision. Economists expect the benchmark rate to remain at 1.75 percent.