NZ$ falls below 49 USc as Australian GDP contracts 0.5% in Q4

The New Zealand dollar fell briefly below 49 USc after Australian GDP figures were released showing its economy contracted 0.5% (seasonally adjusted) in the December quarter. The NZ dollar had been trading at 0.4950 USc just before the announcement, and fell as low as 0.4890 USc after. The NZ dollar also rose about a cent against the Australian dollar on the news. Australia is New Zealand's largest trading partner. The contraction came as a surprise to many economists and analysts who had expected a slight increase or level figure, especially after the Reserve Bank of Australia left its official interest rate unchanged on Tuesday at 3.25%. After reviewing the interest rate, RBA Governor Glenn Stevens said on Tuesday that "(i)n Australia, demand has not weakened as much as in other countries and, on the basis of currently available information, the Australian economy has not experienced the sort of large contraction seen elsewhere." The Australian dollar was trading at around 0.6385 USc before the announcement, and fell as low as 0.6285 USc. Australian GDP in the September quarter rose 0.1% (s.a).