Dollar gains vs. yen after Japanese GDP revised lower

 The New Zealand dollar rose against the yen after Japanese growth was revised lower, damping demand for the nation's currency.

The kiwi advanced to 89.37 yen at 8am in Wellington, from 88.77 yen at 5pm yesterday. The local currency gained to 73.75 US cents from 73.31 cents yesterday after the greenback consolidated following stronger employment data on Friday.

The yen was the worst performing major currency overnight after a report showed the Japanese economy grew just 0.4 percent in the fourth quarter of last year, lower than the previous 0.6 percent estimate. Japanese consumer demand has been weak since the government hiked the sales tax in April last year.

"The Japanese economy is still reeling from the effects of that sales tax rise in April last year on an economy that was already at best fragile and at worst going backwards slightly and what's happening with its major trading partners has hit the export side," said Bancorp Treasury Services client advisor Peter Cavanaugh.

"The yen, whilst weaker against the US dollar, is still pretty strong against the likes of the euro so competition into China from Europe is intensifying from Japan's point of view because of the situation with the euro/yen."

Bancorp's Cavanaugh said the kiwi was also recovering some ground lost over the weekend after the stronger US jobs data, however the yen hadn't benefited because of Japan's weak gross domestic product report.

The yen weakened to 121.18 per US dollar, from 121.07 yesterday.

In New Zealand today, data is released on electronic card transactions for February at 10:45am, and the Real Estate Institute may publish its latest house sales data for February.

Traders will also be watching for Chinese February inflation data due today. 

The New Zealand dollar rose to 95.61 Australian cents from 95.31 cents yesterday ahead of a report on Australian business confidence today.

The kiwi gained to 67.92 euro cents from 67.64 cents yesterday and edged up to 48.74 British pence from 48.68 pence. The trade-weighted index gained to 77.43 from 77.05 yesterday.

(BusinessDesk)