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Dollar little changed ahead of current account data, GDP

Wednesday 24th March 2010

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The New Zealand dollar was little changed ahead of figures today and tomorrow that are expected to show the nation’s current account deficit shrank and economic growth accelerated in the fourth quarter. 

The current account was a deficit of $3.62 billion, or 1.9% of GDP, in the three months ended December 31, according to a Reuters survey. Statistics New Zealand tomorrow will release data showing the economy expanded 0.8% over the same period, according to a separate survey. The reports will be closely watched by credit rating companies. Fitch Ratings said the negative outlook on New Zealand’s AA+ rating would be lifted if the fiscal account shows sustainable improvement, according to ANZ National Bank economists in their morning report.  

“The market’s calm and the current account data isn’t expected to rock the boat,” said Alex Sinton, senior foreign exchange dealer at ANZ National Bank. “We believe the New Zealand dollar has underlying support – it’s got a reasonable yield to a lot of currencies, though not to the Australian dollar.” 

The kiwi was unchanged at 70.64 US cents, and was little changed at 65.40 on the trade-weighted index, or TWI, a measure of the currency against a basket of five trading partners, from 65.39. It edged up to 63.82 yen from 63.78 yen yesterday, and slipped to 76.86 Australian cents from 77.08 cents. It rose to 52.31 euro cents from 52.23 cents yesterday, and inched down to 46.95 pence from 46.97 pence.  

Sinton said the currency may trade between 70.30 US cents and 71 cents today, though with the Australian dollar struggling to “make headway on the topside” the kiwi may also become bogged. The Australian dollar rose to 91.89 US cents from 91.59 cents yesterday.  

Investors remain unsure as to how Greece will overcome its fiscal woes, with European Union President Herman van Rompuy pressing for an agreement before the nations meet later this week. Still, German officials are continuing to dig in their heels, with Chancellor Angela Merkel saying Europe’s largest economy would only agree to financial aid as a last resort, and when done in tandem with the International Monetary Fund.  

Still, stocks on Wall Street and in Europe gained amid signs of a stabilising house market in the US, with existing home sales falling 0.6% in February, compared to the 1.1% decline expected.

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