New Zealand Dollar Drops as GDP Data Boosts RBNZ Rate Cut Bets
- Second quarter New Zealand GDP missed expectations on the whole
- NZDUSD declined more than 0.5 percent after the datawas released
- New Zealand 3-month lending ratefell alongside the exchange rate
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The New Zealand Dollar depreciated more than 0.5 percent versus its US counterpart after the country’s second quarter GDP crossed the wires. New Zealand’s economy grew 0.4 percent (QoQ) in the second quarter of 2015 missing the 0.6 percent forecasted by economists. On a yearly basis, the country’s GDP grew 2.4 percent versus the 2.5 percent consensus. This marks the slowest pace of annual expansion since the fourth quarter of 2013.
The markets are currently pricing in that the Reserve Bank of New Zealand will cut rates at least once over the next 12 months. In its most recent monetary policy statement, the RBNZ mentioned that some further easing seemed likely and that it will depend on the emerging flow of economic data. Today’s GDP release, which missed expectations, can give the markets a case to anticipate further easing in the near-term. Indeed the 3-month bank lending declined in the immediate aftermath of the data release. This suggests that the markets could be expecting the RBNZ to cut rates sooner rather than later.