Wednesday during early deals, the New Zealand dollar declined to multi-day lows against its major counterparts as the latest survey by the Westpac Institutional Bank and McDermott Miller Ltd. showed that New Zealand's consumer confidence fell in the first quarter of 2009.

New Zealand's consumer confidence index fell to 96 in the first quarter from 101.3 in the fourth quarter. However, the confidence indicator was still above the low reading of 81.7 reached in June last year, when high interest rates, petrol prices and other costs squeezed consumer budgets.

Commenting on the news, economists at Westpac said that we continue to believe that the domestic data will disappoint the RBNZ over the next few months, thus failing to support their story of a recovery in growth in the second half of this year. Moreover, the recent strength in the NZ dollar, sustained, implies more work on the interest rate front if the RBNZ is to achieve easier monetary conditions. They reiterated the view that the OCR will reach 2% by the middle of this year.

Since December, the RBNZ has cut the OCR by 200bps to reach the currency rate of 3.00%, rounding out a full 525bps drop in the OCR since July last year.

The New Zealand dollar fell to a 2-day low of 54.47 against the Japanese yen by 1:30 am Eastern Time Wednesday. This may be compared to Tuesday's New York session closing value of 55.14. The next downside target level for the kiwi-yen pair is seen at 52.3.

The yen has been rallying against its major counterparts as Japanese Ministry of Finance said that Japan posted a merchandise trade balance of 82.4 billion yen in February. Analysts were expecting a 13.7 billion yen deficit following a 956.9 billion yen shortfall in January.

Exports plummeted by a record 49.9 percent on year, the data showed, while imports fell 43.0 percent on year to 3.443 trillion yen. Exports have fallen in five straight months, while imports are lower now in four straight months.

Meanwhile, the Bank of Japan Deputy Governor Hirohide Yamaguchi said that Japan's economic and financial conditions will likely continue to be severe.

Addressing business leaders in Otaru, Yamaguchi said at this point, the central bank is giving higher priority for securing market stability and facilitating corporate financing, which are the second and third main areas of the BoJ's conduct of monetary policy.

The New Zealand dollar declined to 2.4130 against the euro by 1:25 am ET. This set a 2-day for the New Zealand currency. On the downside, the New Zealand currency is likely to test support near the 2.4105 level. The kiwi that climbed to a new multi-month high of 2.3665 yesterday closed the day's deals at 2.3935.

At 5.00 am ET today, the Munich-based Ifo Institute for Economic Research is slated to issue a monthly German business confidence survey for March. Business confidence is expected to fall to a historical low of 82.2 in March from 82.6 last month. The current conditions index is seen at 82.5 compared to 84.3 in February.

The New Zealand dollar edged down against the Australian currency, slipping to a 6-day low of 1.2484 by about 2:20 am ET. If the Kiwi slides further, 1.256 is seen as the next likely target level. The aussie-kiwi pair was worth 1.2365 at Tuesday's New York session close.

Against the US dollar, the New Zealand kiwi retreated from yesterday's 10-week high in early deals on Wednesday. The kiwi fell to 0.5585 against the buck by 1:30 am Eastern Time, compared to yesterday's close of 0.5633. The pair is presently trading near 0.5603 with 0.545 seen as the next target level.

In the New York session, the US February durable good orders and new home sales reports are expected. Also, the US Federal Reserve's Pianalto and Yellen are expected to deliver speeches in the afternoon.

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