NZ dollar falls as economic growth misses estimates
NZ dollar falls as economic growth misses estimates, fiscal cliff talks drag
By Paul McBeth
Dec. 20 (BusinessDesk) - The New Zealand dollar fell after figures showed the economy grew less than expected in the third quarter, while US policymakers appear bogged near the finish line on talks to avert US$600 billion of automatic tax hikes and spending cuts.
The kiwi fell to 83.26 US cents at 5pm in Wellington from 83.62 cents at 8.30am and 83.91 cents yesterday. The trade-weighted index fell to 74.47 from 74.75 yesterday.
New Zealand's gross domestic product grew 0.2 percent in the three months ended Sept. 30, half the 0.4 percent pace forecast in a Reuters survey and spurred only by a pick-up in construction activity. The local economy has been showing signs of weakness through the middle of the year, with unemployment rate rising to a 13-year high 7.3 percent, and the figure cemented the view that future growth is hanging on the Canterbury reconstruction effort.
The local data comes as investors continue to wait for US legislators to cast aside their partisan brinkmanship and reach a deal to avert the fiscal cliff, which will probably send the world's biggest economy back into recession. Talks between the Democrat White House and the Republican Speaker of the House of Representatives have deteriorated in the past 24 hours, according to a Bloomberg report.
"It's going to come down to what happens on the US side of the equation," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "For the New Zealand side of the equation it's all over now" and the kiwi might have "another nudge down to 83.20 US cents" in Northern Hemisphere trading, he said.
The kiwi fell to 70.28 yen from 70.69 yen yesterday after the Bank of Japan expanded its asset purchase programme by 10 trillion yen to 101 trillion yen after voters in the world's third-biggest economy elected a new, more activist government last weekend.
The kiwi dollar fell to 63.10 euro cents from 63.31 cents and declined to 51.32 British pence from 51.57 pence yesterday. The New Zealand dollar was little changed at 79.71 Australian cents from 79.73 cents.