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NZ dollar dragged down by weaker than expected Australian growth

Thursday 6th December 2018

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The New Zealand dollar slipped below 69 US cents as negative sentiment about a weaker-than-expected Australian economy spilled over across the Tasman and as Canada's central bank adopted a more negative outlook. 

The kiwi decreased to 68.93 US cents as at 8am in Wellington from 69.13 cents yesterday. It traded at 94.83 Australian cents from 94.73 cents yesterday. 

US markets were closed to mark the death of former President George HW Bush, although S&P futures pricing indicated increased confidence that US-China trade relations will improve after China's Commerce Ministry published a Q&A outlining the successful meeting between presidents Donald Trump and Xi Jinping.

While Wall Street was closed, the kiwi dollar followed its Australian and Canadian counterparts lower. Data yesterday showed Australian gross domestic product grew 2.8 percent in the September quarter from a year earlier, missing a forecast for 3.3 percent. Meanwhile, the Bank of Canada held its key interest rate at 1.75 percent and noted a number of risks to the global economy, which prompted some analysts to pare back their expectations for future rate hikes. 

"The AUD and CAD are the weakest performers after weak data and a dovish monetary policy statement respectively," Bank of New Zealand senior markets strategist Jason Wong said in a note. "The softer AUD and CAD have spilled over into a weaker NZD." 

The kiwi is at an eight-month high against the Australian dollar, and Wong said it may push higher with momentum and market forces in its favour. 

No local data is scheduled for release today, although Fonterra Cooperative Group is expected to lower its forecast farmgate payout at a quarterly update today. 

The kiwi traded at 78.02 yen from 78.08 yen yesterday and fell to 4.7256 Chinese yuan from 4.7458 yuan. It declined to 60.76 euro cents from 61.02 cents yesterday and fell to 54.05 Britsh pence from 54.43 pence. The trade-weighted index was at 75 down from 75.19 yesterday.

(BusinessDesk)

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