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Kiwi dips after weak current account data

NZN 14/06/2017 Rebecca Howard

The New Zealand dollar dipped against the greenback on Wednesday on weaker-than-expected domestic current account data.

But it squeezed back up over the day as investors await the news from the Federal Reserve's policy meeting and local gross domestic product data.

The kiwi was trading at US72.21c as at 5pm versus 72.24c late Tuesday.

It dipped to around US72c after the first quarter current account surplus was a smaller-than-expected $244 million versus a revised fourth-quarter deficit of $2.4 billion.

Economists had expected a surplus of $922m in the first quarter.

"The market thought it was a poor number, a lot worse than expected," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

Figures showing food prices rose at their fastest annual pace in more than six years as increasingly expensive vegetables were made more scarce by the wet autumn weather "scared a few people," he said.

There have been a few recent pieces of data that have "hinted a bit of a slowdown," including housing data, he said.

The kiwi didn't move much after data from the Real Estate Institute showed the national median house price increased to $540,000 in May from $506,100 in May last year but was unchanged from April.

The latest report showed "the housing market remained subdued in May," said Westpac acting chief economist Michael Gordon.

Investors will be watching for Thursday's GDP data, with economists tipping growth on quarter growth of 0.7 per cent.

Mr Kelleher said, however, ASB is expecting 0.5 per cent growth and any disappointment will hit the kiwi-Aussie cross and put parity off the table - for now.

The kiwi was trading at A95.72c from 95.59c.

Ahead of the GDP, however, is the Federal Reserve's rate decision.

The kiwi was trading at 56.62 British pence from 57.12 pence. It fell to 4.9066 yuan from 4.9089 yuan and traded at 79.47 yen from 79.46 yen. It declined to 64.36 euro cents from 64.52 cents.

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