Economists again are over-stretching assumptions that commodity producing countries are somewhat shielded via China demand for commodities in 2010. This was the fatal error made in 2008 with the decoupling argument (US recession). What we are seeing is China will struggle to maintain domestic consumption, thus it will continues to devalue it's Yuan (CNY), which indicates that it's export markets are petering out on US and Europe weakness. If the US Federal Reserve does decide to embark on more asset buying, via MBS (mortgage back securities) which then means that more liquidity will go into the banking system (to be sucked up by the banks), which then also means the US dollar will weaken (sans risk aversion/possible trade war). The Chinese WILL not devalue or bother trying to prove to the US it is strengthening it's currency. So, if a global slowdown is now occurring, or double dip, and a trade war (protectionism) is about to take place. This will most certainly effect commodity producing countries.
Market consensus had a 0.8% growth of New Zealand GDP for the June quarter 2010, q/q now @ 0.2 down from (q1) 0.5
FX street
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