Pound To NZ Dollar Exchange Rate Falls On Strong NZ GDP Growth Data, Poor Japanese Trade Figures Threaten GBP USD Rate

Published: Thursday, 20 September 2012 09:00 BST - Written by David Woodsmith

STORY LINK Pound To NZ Dollar Exchange Rate Falls On Strong NZ GDP Growth Data, Poor Japanese Trade Figures Threaten GBP USD Rate

Fears that levels of economic activity in New Zealand’s commodity-dependent economy are dropping off the edge of a cliff were allayed by the release of Q2 GDP growth data during last night’s Asian session. The numbers revealed that the Kiwi economy had expanded by an annualised 2.6% in the three months to the end of June – up from Q1’s counterpart number of 2.3%. The Q2 result was well ahead of official estimates which suggested that there would be only a slight annualised increase in activity levels. The numbers suggest that New Zealand’s economy has now fully recovered from last year’s devastating earthquake in Christchurch, and that the nation’s exporters have reacted nimbly to the change in trading circumstances which has followed 2007’s credit crisis. Institutional investors have rapidly moved to upwardly revise their expectations regarding the Reserve Bank of New Zealand’s monetary policy stance in the short-to-medium term following the release; an interest rate cut, which had looked a near racing-certainty earlier in the year, is now considered to be a slim outside chance for the RBNZ’s next meeting. Overnight events saw the GBP NZD exchange rate dip as low as 1.9553 before recovering to trade back in the 1.9600s again just before the European equities open.

Elsewhere, the US Dollar has been supported in the overnight session following the release of yet another set of disappointing trade data from one of the world’s predominant economies. Japan’s import and export figures for last month both showed at significantly lower levels than had been anticipated, meaning that the nation’s trade gap had widened to a massive JPY472.8bn. This further evidence that aggregate demand both in Japan’s domestic markets, and in those of her manifold trading partners, is cooling, will give further reason for investors to move back into the safe haven of the US Dollar treasury bill. This could translate into a renewed downward move for the GBP USD exchange rate before the weekend close.

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