NZ dollar dips on weak GDP data
Lower than expected growth for the September quarter reinforced an expectation that the official cash rate will be on hold until at least the middle of next year.
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The New Zealand dollar stepped lower after weaker than expected growth data for the September quarter reinforced an expectation that the official cash rate will be on hold until at least the middle of next year.
New Zealand's gross domestic product contracted 0.2% in the September quarter, with the manufacturing, construction and mining industries all in reverse, Statistics New Zealand said.
The market was expecting a small rise and the Reserve Bank of New Zealand a 0.3% rise.
The NZ dollar fell from around 74.20USc to 74.00USc on the news. Earlier in the session it had been little changed from yesterday at around 74.17USc.
It was already trading at fresh 10-year lows against the Australian dollar and was at 74.11Ac by midday from 74.19Ac at 8am and 74.41Ac at 5pm yesterday.
BNZ currency strategist Mike Jones said the GDP was a surprise to the market.
"It probably tells us the economy is a little weaker than what people thought but it is expected to recover from here," he said.
It did not change the fact that the central bank would sit on its hands until the middle of next year and perhaps even longer than that.
The numbers were "all over the place" with big positives and big negatives in the breakdown.
There was a concern that another quarter of negative growth would produce a technical recession.
The NZ dollar slipped to ¥61.86 by midday from ¥62.14 at 5pm yesterday, while the trade weighted index dropped to 67.04 from 67.19.
The NZ dollar was at €0.5653 from €0.5666 at 8am and €0.5647 yesterday.
The euro dropped to a record low against the Swiss franc for the sixth straight day, with losses accelerating on concern the euro zone debt crisis will continue well into 2011.
NZPA
Thu, 23 Dec 2010
Thu, 23 Dec 2010
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NZ dollar dips on weak GDP data
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