Dollar falls on weaker than expected Australian GDP, strong greenback

The New Zealand dollar followed its trans-Tasman counterpart lower after weaker than expected Australian economic data weighed on the outlook for the two, and as investors continued to back the greenback.

The kiwi fell to 77.71 US cents at 5pm in Wellington from 77.91 cents at 8am, down 78.76 cents yesterday. The currency was little changed at 92.56 Australian cents from 92.53 cents yesterday.

The Australian dollar dropped almost three-quarters of a US cent, and was trading at 83.92 US cents, after Bureau of Statistics figures showed Australian gross domestic product grew 0.3 percent in the three months ended Sept. 30, short of the 0.7 percent expected by economists.

That weighed on the New Zealand dollar, which had already been put under pressure by a fall in dairy prices at the latest GlobalDairyTrade auction and as support for the greenback grew after Federal Reserve vice chairman Stanley Fischer said the Fed was coming close to removing its pledge to keep rates low for 'a considerable time'.

"Aussie GDP was weaker than expected - people expected it to be strong and it went the other way," said Imre Speizer, senior market strategist at Westpac Banking Corp in Auckland. "The kiwi looks like it wants to head down to 77 cents and give that a test."

Government figures today showed New Zealand's building activity rose 1.5 percent in the third quarter, due largely to non-residential work, and lagging a 2.2 percent increase in the value of work put in place.

Separately, realtor Barfoot & Thompson data showed Auckland house sale prices and volumes rose in November, as activity bounced back from a slowdown in the lead-up to the September general election.

The local currency dropped to 62.72 euro cents from 63.17 cents yesterday ahead of the European Central Bank meeting on Thursday in Brussels, and fell to 49.66 British pence from 50.06 pence ahead of the Bank of England's policy meeting, also on Thursday.

The local currency declined to 92.73 yen at 5pm in Wellington from 93.24 yen yesterday. The trade-weighted index fell to 78.13 from 78.71 yesterday.

(BusinessDesk)