NZ dollar dips ahead of China GDP news

The kiwi is likely to finish the week lower on news out of the world's second-biggest economy, China. Photo / File
The kiwi is likely to finish the week lower on news out of the world's second-biggest economy, China. Photo / File

The New Zealand dollar fell ahead of today's Chinese gross domestic product figures, which will likely show growth in the world's second-biggest economy slowed in the second quarter, and sapping demand for assets linked to China's economy.

The New Zealand dollar fell to 79.01 US cents at 8am from 79.31 cents at 5pm yesterday.
The trade weighted index decreased to 72.08 from 72.21.

The kiwi is likely to finish the week lower after the world's second-biggest economy,
China probably grew 7.7 per cent in the three months ended June 30 from a year earlier, slowing from an 8.1 per cent pace in the first quarter, according to a Bloomberg survey.

Earlier this week, figures showed China's inbound shipments rose 6.3 per cent last month from June 2011, almost half the 11 per cent increase forecast in a Bloomberg survey.

"The New Zealand dollar may be unable to climb out of recent troubles today as the Chinese Q2 GDP data approaches," said Alex Sinton, Director Institutional FX at ANZ New Zealand.

"The number would have to be sub 7.5 percent to see risk-off continue," which would push the kiwi lower, he said.

"The reality is that we have to focus on China," Sinton said. "If China was to fall over it would be much more important for us."

The kiwi fell to 5.0355 yuan from 5.0773 yuan yesterday.

Investor sentiment soured after Bank of America strategists have slashed their earnings forecasts for Standard & Poor's 500 companies by 1.4 per cent for this year and next year, citing falling commodity prices and slower global growth prospects. Analysts now project earnings of US$102 per share for 2012 and US$109 for 2013, Bloomberg reported.

Stocks on Wall Street fell with the S&P 500 fell 0.4 per cent to 1335.89, while the Dow Jones Industrial slipped 0.3 percent to 12,573.27.

There is no official New Zealand data set for release today.

The New Zealand dollar was little changed at 51.20 British pence from 51.12 pence yesterday and largely unchanged at 64.73 euro cents from 64.75 cents. It rose to 79.89 Australian cents from 77.79 cents and slipped to 62.62 yen from 63 yen.

- BusinessDesk

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