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OECD revises down growth forecasts across the board

Written by Sam Coxhead on November 29th, 2011.      0 comments

2.34 PM (NZT) The OECD has again revised growth forecasts across the board of its members. The New Zealand forecast was revised down from 4.1% expected growth in 2012 to just 2.5%. Lower global growth and the ongoing aftershocks in Christchurch that hamper the rebuilding process being the main causes.

Overnight the somewhat irrational bounce in risk assets continued to a degree. Equity markets were the stand out performers seeing ganing of between three and five percents acroos Europe and the US. The foreign exchange markets seems to be more realistic with the groweth currencies just managing small gains to go on top of yesterdays bounce. It would appear that a reasonable "short squeeze" maybe playing out, as markets clinbg to hopes that France and Gertmany will come up with a plan to fiinally stem the contagion in the European debt markets.

Thos looking to transfer funds between the major currecnies and the NZ dollar or Australian dollar should consider the staggering of transfers, given the market volatility. The New Zealand dollar lagged the Australian dollar a little overnight but cauight up again towards the end og the New York session as the enthusiasm for risk waned somewhat.

Interestingly both ASB and ANZyesterdayofficially adjusted their calls for the RBNZ to hike the cash rate, moving the expectation from June2012 through to the end of 2012. Given the level of uncertainty and the likely recession in Europe and possibly the UK, even December maybe a little too early.