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NZ GDP for the 4th quarter comes in lower than expected.

Written by Sam Coxhead on March 22nd, 2012.      0 comments

11:00 AM (NZT) The just released NZ GDP for the 4th quarter 2011 showed an increase in activity of just .3% against the expected +.6% number. Manufacturing activity proved to be the main drag on the number, taking the gloss off increased dairy exports, services and retail activity driven by the RWC. This is a weak number, but will be taken in context.
While the NZD is weaker across the board, it is quite a historical number. Manufacturing activity was increased markedly in last week’s BNZ Manufacturing Survey, and will likely reverse the weakness in the Q4 number. The RBNZ are not going to be materially changing their outlook based on this number, as the cash rate looks poised to remain at historic lows of 2.50% until early 2013.
Overnight saw continued sideways trade for the most part, before the US dollar demand took control and pushed back most currencies towards the lows seen last week. The exception has been the YEN , which as expected, has seen a little demand as we head into financial year end for Japanese corporates.
Economic data flow has been light in offshore markets. In the UK the budget has not caused much change for the GBP, and the BOE monetary policy meeting minutes revealed a slightly dovish tone , which was expected for the most part.
In Europe the state of peripheral member debt markets continues to improve on the balance, which is encouraging for the EURO. Portugal has had a much improved week, while Spain has seen a little further pressure. With the focus away from Greece for the time being, expect the economic growth, and Spain and Portugal to receive the focus in the short term.
Chinese manufacturing data later on today will be closely watched.
There have been conflicting reports over the state of Chinese raw commodity demand over the last few days, and this sentiment has uncertainty has weighed on the Australasian currencies.
          Past 24 hours
  Current level Pre-NZ GDP  % Chge since NZ GDP   Low High
NZD/USD 0.8117 0.8149 -0.39%   0.8102 0.8220
AUD/USD 1.0451 1.0451 0.00%   1.0422 1.0528
NZD/AUD 0.7768 0.7798 -0.39%   0.7760 0.7808
AUD/NZD 1.2873 1.2824 0.38%   1.2807 1.2887
NZD/GBP 0.5115 0.5135 -0.39%   0.5108 0.5169
NZD/EUR 0.6143 0.6166 -0.37%   0.6135 0.6188
NZD/YEN 67.68 67.98 -0.44%   67.56 68.82
NZD/CAD 0.8057 0.8084 -0.34%   0.8040 0.8124