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New Zealand Dollar Ticks Up as Current Account Gap Shrinks

New Zealand Dollar Ticks Up as Current Account Gap Shrinks

David Cottle, Analyst

Talking Points

  • New Zealand’s current account balance of payments deficit was smaller than forecast in the old year’s last quarter
  • Indeed, it was the smallest since late 2014
  • But a Fed-focussed NZD didn’t gain much

The New Zealand Dollar gained just a little on Wednesday following news that the country’s current account balance of payments deficit shrank a little more than expected.

The balance for the final calendar quarter of 2016 was a deficit of NZ$2.335 billion (US$1.62 billion). That was below the NZ$2.425 billion deficit expected and less than half of the third quarter’s NZ$4.89 billion gap.

Indeed it was the smallest deficit since the third quarter of 2014.

As a proportion of New Zealand’s Gross Domestic Product, the deficit was 2.7%, as expected and below the previous quarter’s 2.9% level.

NZD/USD rose a little, to 0.69222 from 0.69180 just before the release. However, this pair like most others is fixated on the US Federal Reserve policy decision due later in the global session and widely expected to include an interest-rate rise.

The current-account data so serve as curtain raisers for New Zealand’s fourth-quarter Gross Domestic Product numbers which are due on Thursday. Growth is expected to have run at 0.7% on the quarter for an annualized gain of 3.2%. If realized these figures would evince a slower pace of growth than the previous quarter, but probably not a worrying one for markets.

Modest Gains: NZD/USD

Chart Compiled Using TradingView

Would you like to know more about trading the financial markets? The DailyFX trading guide could be a great first stop.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.