AUD NZD Exchange Rate Accelerates as New Zealand GDP Tumbles
The Australian Dollar New Zealand Dollar (AUD NZD) exchange rate pushed higher on Thursday following a downbeat GDP report from New Zealand.
If you're looking to make an international money transfer, we recommend TorFX.
Figures released by Statistics New Zealand (SNZ) showed that growth was revised down in the fourth quarter, coming in at 0.4%. This was down from 0.8% in the three months to September and well below forecasts that it would slide to 0.7%.
This led year-on-year growth to tumble from 3.3% to 2.7% and prompted a decline in the ‘Kiwi’ as it came in notably lower than initial estimates of 3.1% growth in 2016.
The fall was largely attributed to a fall in exports, with dairy – which accounts for around 30% of the nation’s exports- falling by a staggering 7.5% alone.
However the decline was slightly offset by an uptick in the NZ services sector as it grew by 0.7% thanks to a strong performance by business services and the arts and recreation sectors.
Meanwhile the Australian Dollar was strengthened by the recovery in iron ore trades as prices rocketed up on Thursday morning, breaking the $90 a tonne barrier for the first time since March 3rd.
The sudden upturn in commodity markets caused the spot price for benchmark 62% fines to advance by 3.2% to $90.93 a tonne during the Asian trading session.
The surge in iron ore is closely associated with increased demand for Chinese steel as the slumbering construction sector begins to wake from its winter hibernation. The slashing of trading fees by the Dalian Commodities Exchange has also had an impact.
Analysts at The Steel Index said;
‘A bullish day on the iron ore futures resulted in a 5.46% jump on the most active contract, while rebar futures rose 1.56%. Sellers of spot ore dramatically hiked their offers, with bids following.’
Looking ahead, the Australian Dollar may soften as a lull in domestic data until next week leaves little to drive momentum in the ‘Aussie’, especially if commodity prices begin to weaken once again.
Meanwhile the New Zealand Dollar may look to exploit the weakness in AUD later today if the domestic Business PMI rises from 51.6 in February as predicted.
Current Exchange Rates
At the time of writing the AUD NZD exchange rate was trending around 1.10 and the NZD AUD exchange rate was trending around 0.90