Kiwi dips then recovers ahead of GDP data

Thursday 24th March 2011

The New Zealand dollar dipped overnight but recovered early today ahead of data on this country's economic performance in the December quarter.

The median forecast among economists in a Reuters poll is for the barest increase of 0.1% in gross domestic product in the final three months of 2010, following a fall of 0.2% in the September quarter.

ANZ bank said the GDP data for the three months to December, out at 10.45am today, would be pivotal in shaping market expectations.

Many would be looking for GDP-inspired dips in the NZ dollar to add to positions and cover levels, but any such dip should be limited to the mid US73c zone and may be short lived, ANZ said.

Overnight the NZ dollar dipped from US74.15c at 5pm to below US73.80c, then recovered to US74.24c at 8am today.

BNZ strategist Kymberly Martin said risk appetite appeared to have stabilised with relative calm in Japan, and an absence of new developments in the Middle East.

Against that backdrop the NZ and Australian dollars both made modest gains overnight, helped by a strong rebound in commodity prices during the past few days.

The NZ dollar rose to a one-week high against the European currency, lifting to 0.5256 euro at 8am from 0.5230 at 5pm.

The euro eased from a 4-1/2-month high against the greenback on concerns a political crisis in debt-ridden Portugal could force its government to seek aid, though losses in the single currency should be limited amid expectations of rising euro zone interest rates.

The kiwi was little changed at 60.01 yen at 8am, while slipping to A73.13c from A73.44c at 5pm. The trade weighted index lifted to 65.03 at 8am from 64.94 at 5pm.

NZPA

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