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Dire Consumer Confidence Fails To Dent NZ Dollar

Fuseworks Media
Fuseworks Media

Wellington, June 25 NZPA - Dire consumer confidence data failed to knock the New Zealand dollar down against the greenback, although it weakened against the aussie today.

Markets are on hold for the US Federal Reserve's decision on interest rates tomorrow morning NZ time.

At 4.30pm, the kiwi was buying US75.74c from US75.61c at 4.30pm yesterday, while against the aussie, it fell to A79.17c, from A79.43c at 4.30pm yesterday.

Consumer confidence, already at a decade low in the March quarter, plunged further in the June quarter to its lowest since the recession of 1991, according to the Westpac McDermott Miller quarterly survey.

Westpac economist Donna Purdue called this quarter's nose-dive "jaw dropping" but traders said it was not a surprise.

Tomorrow, Statistics NZ will released March quarter current account data, with the deficit picked to be $1.7 billion in the quarter and $13.2 billion for the year.

More focus will be on Friday's GDP data which economists expect to show contracted by 0.3 percent in the first quarter and a number below that figure would see the kiwi sold.

However, far outscoring those in importance, is the Fed's decision. It is most likely to keep interest rates unchanged at 2 percent, following a dip in US consumer confidence to a 16-year low.

Investors are focusing on the Fed's post-meeting statement and whether the central bank will signal more concern about inflation than downside risks to the US economy.

"Looking at yesterday's numbers, you get the sense that they cannot just talk about inflation," said one trader.

"If that turns out to be the case, the dollar will probably be sold, at least initially."

The NZ dollar trade weighted index closed on 67.82 from 67.86 at the same time yesterday.

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