NZ dollar falls vs. Australian dollar after Australian GDP

NZ dollar falls vs. Australia’s currency after Australia posts robust GDP

By Hannah Lynch

June 6 (BusinessDesk) - The New Zealand dollar fell versus the Australian dollar after the nation’s biggest trading partner posted first-quarter gross domestic product that grew more than twice the pace economists had predicted.

The New Zealand dollar fell to 77.33 Australian cents at 5pm from 77.60 cents immediately before the growth figures were released. The kiwi rose to 76.22 US cents from 75.59 cents at 8am.

Australian GDP expanded 1.3 percent in the three months ended March 31, according to government data. That's more than twice the 0.6 percent pace economists' predicted in a Bloomberg poll. The GPD figures come after the Reserve Bank of Australia cut the target cash rate by 25 basis points yesterday to 3.5 percent.

Australian GDP "has certainly had an influence on the kiwi crosses," said Chris Weston, market strategist at IG Markets in Sydney. "A lot of (Australia's) growth is coming through the mining space not the domestic sector."

In the US, weak data has sparked speculation the Federal Reserve will be forced to add additional stimulus, with Chairman Ben Bernanke speaking to the congressional committee on Thursday about the economic outlook. In April, Fed minutes acknowledged a loss of momentum in US growth could warrant a third round of quantitative easing, or QE3.

"Bernanke is going to be the highlight of the week so we could see a rally," Weston said. "He will give a more dovish tone than previous statements."

The New Zealand dollar rose to 60.93 euro cents from 60.71 cents at 8am after leaders of the Group of Seven nations agreed to help Spain and Greece sort out their public finances following an emergency conference call on Tuesday, though no decisive steps were made to aid the indebted nations.

The New Zealand dollar rose to 49.40 British pence from 49.15 pence at 8am. The kiwi increased to 60.11 yen from 59.53 yen. The trade weighted index climbed to 69.48 from 69.15.

(BusinessDesk)

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