NZ dollar climbs after slower than expected US growth
NZ dollar climbs after slower than expected US growth, Fed sticks to status quo
By Paul McBeth
May 1 (BusinessDesk) - The New Zealand dollar climbed above 86 US cents after the harsh US winter slowed growth more than expected in the world’s biggest economy and the Federal Reserve continued to trim its money printing programme.
The kiwi climbed to 86.21 US cents at 8am in Wellington from 85.63 cents yesterday. The trade-weighted index advanced to 80.08 from 79.68.
The greenback tumbled after US gross domestic product grew an annualised 0.1 percent in the March quarter, slowing from an annualised pace of 2.6 percent in the December quarter and below the 1.2 percent forecast by economists. The harsh winter conditions weighed on the data, and forward looking indicators within the series were more upbeat. After the GDP numbers, the Federal Open Market Committee kept the key rate near zero, trimming its quantitative easing programme by US$10 billion to $45 billion as expected.
“The US is in a deeper hole than we thought and climbing out of it, because of the increased depth, is going to take longer,” said Sam Tuck, senior FX strategist at ANZ Bank New Zealand. “The US data, while remaining optimistic should ensure carry and growth for New Zealand dollar investors remain attractive for a while.”
Traders will be watching the US ISM manufacturing survey for more signs of life in the world’s biggest economy ahead of the Friday non-farm payrolls report. European markets will be closed on Thursday for the May Day holiday.
Chinese manufacturing data will be the main event in the local trading session, with analysts expecting industrial production to remain flat in the world’s second biggest economy.
The kiwi gained to 88.12 yen at 8am in Wellington from 87.65 yen yesterday, and rose to 92.78 Australian cents from 92.19 cents. It increased to 62.14 euro cents from 62.01 cents yesterday, and advanced to 51.07 British pence from 50.87 pence.