New Zealand December quarter current account deficit reported at the lowest since March 2014. The seasonally adjusted current account deficit decreased to $1.6 billion for the December 2016 quarter, $420 million smaller the September 2016 quarter’s deficit.

Key factor:

  • The primary income deficit decreased by $140 million to reach $2,043 million.
  • Secondary income increased by $236 million to reach a surplus of $68 million.
  • The services surplus increased by $174 million to reach $1,208 million.
  • The goods deficit increased by $130 million to reach $833 million.
  • For the year ended December 2016, the current account deficit was $7.1 billion (2.7 percent of GDP; it was 3.4 percent of GDP for the December 2015 year).
  • New Zealand’s net international liability position was $156.5 billion (59.9 percent of GDP) at 31 December 2016, down from a revised $166.1 billion (64.8 percent of GDP) at 30 September 2016.
  • New Zealand’s external debt position was $143.5 billion (55.0 percent of GDP) at 31 December 2016, down from $149.1 billion (58.2 percent of GDP) at 30 September 2016.

“New Zealand earned $2.0 billion from investment overseas, $129 million more than in the September quarter,” international statistics senior manager Daria Kwon said. “A large portion of this extra income was reinvested back into the overseas subsidiaries, instead of being paid out as dividends.”

FX- The Kiwi dollar trading at 0.6923 (AEDT 9:00AM) following the data on early Wednesday Asia-Pacific time. Last Thursday (Mar090 the cross snap the ten-day falling streak consolidating between 0.6890 and 0.6950 for four sessions.

Support: 0.6890/06860, 0.6780 and 0.6670

The cross remains in the uptrend, holding the twenty-month ascending trendline. Potential support finds between 0.6860 and 0.6760 levels.

Resistance seems between 0.0.6950/0.6970 above this 0.7050 and 0.7100 exists. Ahead of FOMC meeting (Mar15) the daily RSI indicates oversold at 28.

The downside is limited, medium term trading range remains between 0.6760 and 0.7250.

Westpac (Mar13)-The weakness in dairy prices see the model expand its NZD short, now up to 18.7%.

GDP Q4 2016 preview:

CITI BANK- Although quarterly economic growth may slow down from 1.1% to 0.7%, the yearly growth may remain at 3.2%. Although milk price dropped before, milk price is not highly correlated with NZ economic growth and thus investors do not need to be overly concerned.