New Zealand Dollar Flat as Accelerating Growth Fails to Impress Markets
THE TAKEAWAY: New Zealand economy accelerates in 3rd quarter > Acceleration reflects one-off effects from Rugby World Cup > NZD flat
The New Zealand Dollar was relatively unchanged despite GDP figures pointing to acceleration in growth in the 3rd quarter. Following the release, the NZDUSD pair rose briefly to 0.7712 before settling in a tight range near the 0.7700 level.
Charts generated using Strategy Trader
According to the Statistics New Zealand report, the economy in the 3rd quarter expanded 0.8 percent from the previous three-month period, beating expectations of a 0.6 percent quarterly expansion. In the 2nd quarter, quarterly growth was 0.1 percent. On a year-to-year basis, the South Pacific nation’s GDP grew 1.9 percent, below consensus estimates of 2.2 percent. The yearly growth figure for the 2nd quarter was revised down from 1.5 percent to 1.2 percent. Fishing, forestry, and mining (+3.7 percent), along with retail and accommodation (+2.5 percent) and manufacturing (+2.3%) led the quarterly gains. Private spending rose 1.5 percent.
The acceleration in growth, however, was not enough to significantly move the Kiwi as markets had been largely expecting a pickup due to the recent Rugby World Cup. The sporting event, which began in September, is estimated to have drawn more than 130,000 visitors to the country, a boon to New Zealand’s tourism-dependent economy, as reflected in the 2.5 percent quarterly expansion in retail- and accommodations-related activity. The report did also point to relative strength in the natural-resource sector and manufacturing. However, more recent data since the 3rd quarter – ranging from yesterday’s wide-than-expected current-account deficit and weak consumer sentiment to a more pessimistic business outlook – continue to show that the economy remains on uneven footing. In the market’s view, the growth spurt in the 3rd quarter reflects one-time factors rather than a sign of an enduring recovery trend.
Overall, as a result of this highly uncertain economic scenario, markets – as implied by overnight-index swap rates – continue to anticipate no change in monetary policy on the part of the RBNZ. In the absence of monetary policy as a meaningful driver of Kiwi movements in the coming months, NZD traders will continue to look to global risk trends for guidance.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.