NZ dollar little changed as Australian GDP shows healthy household consumption

The New Zealand dollar was little changed after figures showed Australia’s economy got a boost from increased consumer spending, offsetting the decline in its resources sector.

The kiwi traded at 75.55 US cents from 75.58 cents at 8am, up from 75.26 cents yesterday. The local currency increased to 96.59 Australian cents from 96.35 cents yesterday.

Australian Bureau of Statistics figures showed the country’s economy grew 0.5 percent in the three months ended Dec. 31. While that was at the lower end of expectations, robust household spending helped offset the decline in mining. Combined with yesterday’s decision by the Reserve Bank of Australia to leave rates unchanged, investors refrained from selling the New Zealand and Australian dollars.

“The headline numbers was slightly lower than consensus, but the detail was reasonably solid,” said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. “I do like the kiwi nudging above 76 (US) cents in the next few weeks” due to the high level of speculative investors who have shorted New Zealand’s currency, meaning they are betting it will depreciate, and a strong local economic outlook.

Government figures today showed New Zealand’s residential building activity grew 4.3 percent in the December quarter, led by earthquake-related work in Canterbury. Separately, dairy prices rose 1.1 percent at Fonterra Cooperative Group’s latest GlobalDairyTrade auction, led by gains in butter, cheddar and skim milk powder.

Speizer said the next major event that could move the market will be US non-farm payrolls for February on Friday in Washington, which he said may miss expectations due to the winter weather.

The kiwi gained to 4.7382 Chinese yuan from 4.7267 yuan, rose to 90.39 yen from 90.11 yen, and climbed to 67.63 euro cents from 67.26 cents. It advanced to 49.19 British pence from 48.95 pence. The trade-weighted index advanced to 78.56 from 78.28 yesterday.

New Zealand’s two-year swap rate rose to 3.575 at 5pm in Wellington from 3.54 and the 10-year swap rate advanced to 3.825 from 3.78.

Westpac’s Speizer said the interest rate market had closed before yesterday’s RBA decision, and today’s increase in the swap rates was investors catching up with the central bank’s decision to stay on hold.

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