New Zealand Q3 GDP Snapshot and What’s Next on forex for NZD / USD
The release of New Zealand’s Q3 GDP later today at 4:45 p.m. EST provides a springboard for forex traders following the highly anticipated FOMC meeting at 2:00 PM EST.
In the last quarter, New Zealand GDP was 2.8% qoq, well above market expectations for a 1.1% increase. Evidence of strong economic momentum until a Covid outbreak in mid-August has caused a return to lockdown.
In Q3, GDP is expected to have contracted -4.5%, notably less than the 9.9% qoq decline from the last lockdown in Q2 2020, due to the shorter duration of the lockdown this year, the underlying dynamics of the economy and because businesses and households were better able to adjust to the Covid restrictions.
As most of the restrictions have since eased, the focus is now on the rebound. Although Auckland is on lockdown for the entire month of October, GDP is expected to grow 3.6% in the fourth quarter.
RBNZ’s forecast for third-quarter GDP calls for a 7% drop. As such, tomorrow’s GDP data will provide a more solid starting point, and with inflation and employment on the rise, the RBNZ is unlikely to waste much time raising interest rates in 2022. .
The underlying strength of the New Zealand economy has provided little support to the New Zealand dollar, against an endemic US dollar, in line with our view presented here at the end of November.
As can be seen from the chart below, NZD / USD today hit new lows on its cycle and is aiming for support from the bottom of a nine month trend channel, currently around 0, 6690. The preference is for the support level .6690 / 70 to hold (if tested) before a rebound towards the short term resistance at .6800 / 10.
Daily NZD / USD Chart
The figures indicated the zones as of December 15, 2021. Past performance is not a reliable indicator of future performance. This report does not and should not be taken as containing advice or recommendations of financial products.
Par Tony Sycamore, Forex.com » Official site
Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell forex foreign exchange contracts or CFDs. Although the information contained in this document has been taken from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may result from the fact that someone relies on such information.
