Kiwi gains as investors prepare for slower growth across Tasman
BUSINESSDESK: The New Zealand dollar gained against its Australian counterpart after economic figures show the pace of growth across the Tasman just skimming below expectations and concerns China's demand for the nation's resources is slowing.
The kiwi rose to 77.87 Australian cents at 5pm in Wellington from at 77.59 cents at 8am and 77.65 cents yesterday. It fell to 79.44 US cents from 79.74 cents yesterday.
Australian gross domestic product grew 0.6% in the three months ended June 30, according to government figures, slower than the 0.7% forecast in a Reuters survey of economists.
That comes as falling commodity prices such as iron ore weigh on investors' support for Australian assets, which dodged a recession during the global financial crisis on the strength of its resources sector.
The Australian dollar fell 0.6% $US1.0198, the lowest level since July 12.
"Australian GDP in Q2 is as good as it gets for a while – Q3 is going to be quite a bit worse," says Imre Speizer, market strategist at Westpac Banking in Auckland. The kiwi "looks like it wants to spurt a bit higher" against the Australian dollar.
The deteriorating demand for Australia's main exports comes as the price for dairy products rose in the latest auction on Fonterra's GlobalDairyTrade platform. Dairy prices have been supported by rising grain prices amid drought in the Northern Hemisphere.
New Zealand's building activity grew 0.8% to $1.7 billion in the June quarter, government figures show. Rapid expansion in residential construction in Canterbury offset a decline in commercial building.
Traders are preparing for the European Central Bank's monetary policy review on Friday, where president Mario Draghi is expected to unveil a programme to buy government debt from struggling sovereign nations as a means to firm up the region's financial stability.
The kiwi edged up to 63.36 euro cents from 63.22 cents yesterday. It fell to 62.29 yen 62.47 yen yesterday and declined to 50.08 British pence from 50.18 pence.
The trade weighted index rose to 71.97 from 71.67.