Kiwi gains after af PM’s GDP comment

NZ dollar lifts 25 basis points after on-air comments, but Ardern claims she was talking about something else

Prime Minister Jacinda Ardern says she was talking about one thing and Newstalk ZB host Mike Hosking another when said she was “pretty pleased” when asked about gross domestic product growth.

Ardern had been asked about the GDP figures ahead of tomorrow’s official release of the second-quarter economic data and said she had received a “hint”.

A spokesman said afterwards that she had been referring to the Government’s June year financial statements and had “made a mistake”.

The New Zealand dollar lifted to US65.84c from US65.78c following her comments — although it fell back to US65.67c.

Westpac senior market strategist Imre Speizer said Ardern’s reported comments coincided with a 25 basis point move up in the Kiwi.

Speizer said the currency went from US65.75c to US$65.97c around the time that Bloomberg reporting of the radio interview popped up on forex dealers’ screens.

“You can never be 100 per cent certain, but the market move coincided with headlines reporting what Ardern had said,” Speizer said.

Ardern told reporters later that she had been “obviously” referring to unaudited financial accounts.

“I accept I was talking about one thing and he was talking about another.”

She denied she was confused. “I know what I was talking about. Unfortunately the question I was being asked was something else.”

Ardern told Newstalk ZB she’d been given “a hint” and “I am very pleased with the way we are tracking”.

Finance Minister Grant Robertson said the Government got no preview of GDP figures.

“She was speaking about the unaudited Government financial statements for the year to June,” he told reporters.

He said he was not concerned that the dollar had been affected by the Prime Minister’s comments.

National leader Simon Bridges said Ardern’s mis-step showed she was distracted by other issues. “These figures really matter. They’re arguably, if not the most important, certainly up there for New Zealand.”

The GDP data, due tomorrow, will come under particular scrutiny after the central bank last month kept the official cash rate at 1.75 per cent and pushed out the timing of the first rate hike citing weak growth as a concern.

Economists are expecting the data to show GDP expanded 0.8 per cent from the first quarter and 2.5 per cent from a year ago, according to a Bloomberg poll of 16. But both ASB and Westpac were more positive 0.9 per cent growth in the second quarter — a big bounce back from 0.5 in the first quarter. The central bank is tipping growth of 0.5 per cent.

Reserve Bank Governor Adrian Orr reiterated “the direction of our next OCR move could be up or down”.

Stronger than expected GDP growth would quell any market expectations of a rate cut. Market pricing for a rate cut also dipped to 44 per cent from 50 per cent before Ardern’s comments.

Government Statistician Liz MacPherson says there are “absolutely not” any hints to anyone, including the Prime Minister, before the release of economic growth figures from Stats NZ.

Firmness in the Kiwi was shortlived, with US President Donald Trump’s move to go ahead with US$200m of tariffs on China putting upward pressure on the US dollar and downward pressure on the kiwi.

I know what I was talking about. Unfortunately the question I was being asked was something else.

Jacinda Ardern