With the release of a better than expected Quarter 4 2010 GDP figure (increase of 0.2%) New Zealand has avoided a double dip recession; however that’s not to say things were going well at the end of last year, in truth the economic recovery was in trouble. That said, the figures have been largely overshadowed by the devastating earthquake in Christchurch and the subsequent OCR cut by the RBNZ.

The knock on effect of the earthquake is starting to filter through to economic data. There’s been an unsurprising fall in business confidence that will probably only bounce back once the rebuilding of Christchurch is underway, which looks likely to be a feature of 2012.

On the international front the economic markets have gained confidence despite continued volatility in North Africa and the Middle East, and the ongoing problems following the earthquake in Japan. The NZ Dollar has been the recipient of renewed strength off the back of improving market sentiment – risk appetite it would seem is still strong.

GBPNZD - After the Japan earthquake last month GBPNZD broke briefly upward of GBPNZD 2.22 however the momentum in Sterling’s favour was short lived. Risk appetite returned within a few days and the NZD gained strength as a result, pushing the rate back down to GBPNZD 2.1 and below.

EURNZD – In a similar pattern to GBPNZD the Euro gained off the back of Japan’s devastating quake (tipping EURNZD 1.94) but the gains were eradicated soon thereafter and the pairing traded lower – currently down to EURNZD 1.84.

NZDUSD – Since mid March the NZD has made solid gains against the US Dollar (over 6% gained in a few weeks) putting it back up to NZDUSD 0.78+

NZDZAR – This pairing has been level pegging for the past few weeks – neither currency making much ground on the other. NZDZAR 5.05 – 5.18 has been the tight band.