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Worse Than Expected Trade Data Sends Kiwi Lower

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Fuseworks Media
Fuseworks Media

Wellington, April 29 NZPA - Worse than expected trade figures sent the New Zealand dollar lower today.

New Zealand's March trade performance was surprisingly weak, with dairy export values lower than forecast while high volumes of oil kept imports up.

A $50 million deficit in the March trade balance contrasted with the median forecast for a $395 million surplus.

Analysts said further softening in the economy was evident with both exports and imports coming in weaker than expected. It was unclear if the low export figures already showed the effects of the drought.

The kiwi closed the session on US78.22c, having been up at US78.60 just before the trade figures were released. It closed on US78.37c yesterday.

An Auckland dealer said the kiwi still felt "heavy" at the close but he said it would take a drop in New Zealand's cash rate or a major recovery in the US dollar to significantly push the kiwi lower "and that isn't going to happen tomorrow".

Quiet trading ahead is expected with Tokyo on holiday today and May Day holidays in Europe on Thursday when the US Federal Open Market Committee (FMOC) makes its next review of interest rates.

The kiwi weakened on all its major crosses. It closed on A83.55c against the Australian dollar from A83.77c yesterday.

The trade weighted index closed on 69.84 from 70.02 at 5pm yesterday.

The US dollar was shackled in tight ranges ahead of the Federal Reserve meeting and a welter of major economic data which could well decide the medium-term outlook for US interest rates.

Dealers were holding their breath for the outcome of a two-day policy meeting of the FOMC and first-quarter economic growth numbers, both due on Thursday (NZT).

Speculation is high the US central bank will trim its fed funds rate by a 25 basis points to 2.0 percent and signal a desire to hold rates there for the time being.

Such an outcome could support the US dollar, though traders noted that the market had already moved to price in the possibility.

NZPA WGT Reuters sml ob

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