NZ dollar dips then recovers (updated)
The New Zealand dollar recovered from a fall triggered by weaker than expected growth data for the September quarter, which 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 but recovered to be 74.35USc at 5pm, which compared with 74.20USc at the same time yesterday.
Dealers said there was demand for the currency at lower levels. Trading is thin ahead of the Christmas holiday season
The local currency is trading at fresh 10-year lows against the Australian dollar, and was at 74.18Ac by 5pm 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 ¥61.77 by 5pm from ¥62.14 at 5pm yesterday, while the trade weighted index was unchanged at 67.19.
The NZ dollar was at €0.5669 from €0.5666 at 8am and 0.5647 yesterday.
NZPA
Thu, 23 Dec 2010
Thu, 23 Dec 2010
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NZ dollar dips then recovers (updated)
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