NZ dollar falls ahead of GDP report as global risk sentiment wanes

Thursday 20th December 2012

The New Zealand dollar fell as global risk sentiment abated and ahead of figures expected to show the economy slowed in the third quarter.

The kiwi dollar fell to 83.62 US cents from 83.91 cents at 5pm in Wellington yesterday. The trade-weighted index fell to 74.56 from 74.75.

Gross domestic product probably rose 0.4 percent in the three months ended Sept. 30, from a 0.6 percent pace in the second quarter, according to a Reuters survey of 13 economists. Forecasts ranged from zero growth to 0.7 percent. Shares weakened on Wall Street after US housing starts fell more than expected and fiscal cliff talks appeared to stumble. The euro gained after German business confidence rose for a second month.

"There is room for some more correction of the NZD/USD if the GDP figure is weaker than expectations, however in the bigger scheme of things we continue to see global sentiment as the main driver for the NZD," Bancorp Treasury Services said in its morning note. "In the lead-up to Xmas the fiscal cliff will be the calendar headline."

Bancorp said 83.20 US cents is the next major level of support. -

US President Barack Obama would reportedly veto a tax and spending plan presented by House Speaker John Boehner, but said he remained hopeful of an accord by Christmas. The Republican "Plan B" would extend low tax rates for those who earn less than US$1 million-Obama has shifted to a US$400,000 threshold after starting out at US$250,000.

The euro rose after Ifo institute's German business climate index rose to 102.4 this month, topping the 102 expectation in a Bloomberg survey.

The kiwi dollar fell to 63.10 euro cents from 63.31 cents. The local currency slipped to 51.41 British pence from 51.57 pence. The New Zealand dollar declined to 79.67 Australian cents from 79.73 cents and eased to 70.57 yen from 70.69 yen.

BusinessDesk.co.nz

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