NZ dollar slides to 3-month low vs. Aussie after upbeat Australian GDP report

Thursday 3rd March 2016

The New Zealand dollar touched a three-month low against its trans-Tasman counterpart after better-than-expected Australian growth data prompted traders to push out expectations for further interest rate cuts in Australia.

The kiwi reached 90.97 Australian cents, and was trading at 91.02 cents at 8am in Wellington, from 91.69 cents at 5pm yesterday. The local currency advanced to 66.42 US cents from 66.24 cents yesterday, having touched a low of 65.90 cents overnight following stronger than expected US labour market data.

The Australian dollar rallied after a report showed gross domestic product grew at a 3 percent annual pace in the final quarter of 2015, better than the 2.5 percent pace expected by economists and the Reserve Bank of Australia. Market pricing for the next RBA interest rate cut has also been pushed out slightly to September from August, Bancorp Treasury Services said in a note.

The Australian dollar "got a lot of momentum off the Australian GDP yesterday," said Stuart Ive, OMF senior dealer, foreign exchange. "We saw the move start in our timezone but the Northern Hemisphere really ran with it overnight with the Australian dollar gaining significantly across the board."

OMF's Ive said the kiwi had support at 91 Australian cents and would probably consolidate around this level until the Reserve Bank of New Zealand interest rate decision next Thursday.

In New Zealand today, fourth-quarter building work put in place data is released at 10:45am while the ANZ Commodity Price Index is published at 1pm. Australia releases its January trade balance data.

The New Zealand dollar advanced to 61.11 euro cents from 60.99 cents yesterday, and gained to 4.3504 yuan from 4.3394 yuan. It fell to 47.18 British pence from 47.48 pence, and slid to 75.31 yen from 75.42 yen. The trade-weighted index was little changed at 72.14 from 72.12.

BusinessDesk.co.nz

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