Kiwi rises after weak Aussie GDP
by Paul McBeth
Dec. 1 (BusinessDesk) – The
Australian economy grew at a slower-than-expected in the
third quarter as exports came off the boil in the period.
Australia’s gross domestic product grew 0.2% in the three months ended Sept. 30, according to the Australian Bureau of Statistics.
That came in below the 0.5% expansion expected by a Reuters survey, and was dragged down by a 2.4% fall in exports and a 0.5% decline in imports.
The Australian dollar dropped half a cent to 95.56 U.S. cents immediately after the announcement, and the kiwi gained to 77.57 Australian cents from 77.23 cents.
The kiwi initially fell against the greenback, but pared its losses and recently traded at 74.22 U.S. cents.
Australian growth was underpinned by a 0.6% increase in household spending and a 0.9% gain in capital expenditure.
Agriculture, forestry and fishing grew by almost 19% due to strong crop forecasts. Australia dodged recession when the world hit the skids in 2008, and was able to start tightening monetary policy before any other G-20 nation as Chinese demand for its raw materials underpinned the economic recovery.
Today’s data damped the prospect of a rate rise by the Reserve Bank of Australia next week, with investors betting Governor Glenn Stevens will only hike the target cash rate by 20 basis points over the coming year, according to the Overnight Index Swap curve.