NZ dollar little changed ahead of GDP data
By Suze Metherell
June 18 (BusinessDesk) - The New Zealand dollar was little changed ahead of data due tomorrow which is expected to show accelerating growth in the domestic economy, which may cause the dollar to climb above 87 cents.
The kiwi edged higher to 86.58 US cents at 5pm in Wellington, from 86.48 cents at 8am and 86.56 at 5pm yesterday. The trade-weighted index was 80.82 from 80.74 this morning and 80.70 yesterday.
Government data due tomorrow will probably show economic growth accelerated in the first quarter on increased construction activity, supporting the Reserve Bank's view that it must press on with interest rate increases to keep inflation at bay. Gross domestic product grew 1.1 percent in the first three months of the year, from a 0.9 percent pace in the fourth quarter of 2013, according to the central bank's forecast. That would mark the fifth quarter with growth of 1 percent or above in the past six years.
After the GDP announcement "it could have a spike through 87 cents. My own view which is purely speculative, is that these are good levels on the week, with a one to two week time frame to sell the kiwi," said James Davies, senior dealer at OMF. "The speculative market is quite long on the kiwi, meaning they've already bought it."
Last week, the kiwi rose 1 US cent and has remained at elevated levels after the Reserve Bank hiked the official cash rate for a third time this year and affirmed its track for future rates. It said the economy's expansion had "considerable momentum" and raised its estimate for growth in the first half of the year to 4 percent from 3.5 percent.
In contrast, the central bank's trans-Tasman counterpart has kept rates at a historic low, and minutes to this month's meeting showed the bank had a pessimistic view of Australia's economic growth.
The New Zealand dollar was a touched a three-week high of 92.82 Australian cents during the day, trading at 92.73 cents at 5pm, from 92.65 cents at 8am and 92.49 cents yesterday.
The local currency rose to 88.54 yen from 88.34 yen this morning and 88.26 yen yesterday. The kiwi was little changed at 63.91 euro cents from 63.87 cents this morning, and 63.84 yesterday. The New Zealand dollar edged higher to 51.03 British pence from 51 pence this morning and yesterday.