NZ Dollar Retreats As Asian Stock Markets Traded Lower

The New Zealand dollar retreated from early highs against other major currencies in the Asian session on Wednesday, as Asian stock markets traded lower. This was due to investors stance on adopting a cautious stance ahead of the U.S. Federal Reserve's monetary policy decision due later in the day.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement for clues about the outlook for policy, including details of how the central bank plans to start shrinking its $4.5 trillion balance sheet.

Traders also await the latest New Zealand political opinion poll ahead of Saturday's general election and the Bank of Japan's two-day meeting that begin today.

In other economic news, data from Statistics New Zealand showed that New Zealand posted a seasonally adjusted current account deficit of NZ$1.598 billion in the second quarter of 2017. That follows the NZ$2.2.85 billion shortfall in the three months prior.

On a yearly basis, New Zealand's current account deficit was NZ$7.5 billion.

In the Asian trading, the NZ dollar fell to 81.40 against the yen and 1.0978 against the Australian dollar, from an early more than a 6-week high of 81.86 and a 4-week high of 1.0921, respectively. If the kiwi extends its downtrend, it is likely to find support around 79.00 against the yen and 1.11 against the aussie.

Against the U.S. dollar and the euro, the kiwi dropped to 0.7303 and 1.6439 from an early 2-day highs of 0.7342 and 1.6349, respectively. The kiwi may test support near 0.72 against the greenback and 1.66 against the euro.

Looking ahead, U.K. retail sales data for August is due to be released at 4:30 am ET.

In the New York session, U.S. existing home sales data for August and crude oil inventories data are slated for release.

At 2:00 pm ET, the Federal Reserve will announce its decision on monetary policy. The Fed is expected to hold rates at 1.25 percent.