Wednesday 5th December 2018
|Text too small?|
The New Zealand dollar rose against its Australian counterpart after rate hikes across the Tasman look even more distant in the wake of disappointing third-quarter economic growth.
The kiwi traded at 94.73 Australian cents at 5pm versus 94.39 cents at 8am, a level that was unchanged from yesterday. It was at 69.16 US cents from 69.54 cents yesterday.
Australia's gross domestic product expanded 0.3 percent in the three months through September from the prior quarter, and 2.8 percent from a year earlier, the Australian Bureau of Statistics said. Economists had expected 0.6 percent growth on quarter and a 3.3 percent on-year increase. Economists say there's more to come.
"It would be tempting to blame the slowdown in GDP growth in the third quarter on temporary factors. But we believe that the full effects of falling house prices and tighter credit conditions haven’t been felt yet and we expect GDP growth to slow further next year," said Marcel Thieliant, senior Australia and New Zealand economist for Capital Economics.
Ross Weston, head of trading for Kiwibank, said it was "a bit of a shocker of a GDP report and may give the RBA a bit of a fright" as it is tipping the economy to expand around 3.5 percent this year and it is currently sitting at 2.8 percent.
Futures markets are now pricing in only a 20 percent probability of a hike by Christmas next year, down from 30 percent before the GDP data release, Reuters reported.
The kiwi, meanwhile, stuck to a tight range against the greenback. Markets were jittery after a series of tweets from US President Donald Trump indicating he's ready to impose tariffs if a US-China deal can't be reached, but sentiment got a lift when China's commerce ministry was more upbeat.
"The economic and trade teams of the two sides will actively promote the consultation work within 90 days in accordance with a clear timetable and roadmap," according to a translated response to questions by the ministry's press spokesperson. The comments were posted on its web page.
"The kiwi dollar is very whippy and very sensitive to those sort of remarks," said Weston.
The kiwi traded at 4.7458 Chinese yuan from 4.7652 yuan. It dropped to 78.08 yen from 78.78 yen yesterday and traded at 61.02 euro cents from 61.16 cents.
The local currency decreased to 54.43 British pence from 54.60 pence yesterday. The trade-weighted index was at 75.19 from 75.40 yesterday.
New Zealand's two-year swap rate decreased 1 basis point to 2.06 percent and 10-year swaps dropped 3 basis points to 2.82 percent.
No comments yet
MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite