NZ Q2 GDP data smashes expectations and boosts NZDUSD

In today's first instalment of an Antipodean data double header, New Zealand Q2 GDP smashed expectations, expanding by 2.8% after a 1.4% rise in the March quarter.

New Zealand

Growth was driven by a 2.8% q/q rise in the services industry, which makes up about two-thirds of the NZ economy, aided by primary industries including agricultural that increased by +5% q/q and goods production +1.3%q/q. 

The data confirms the booming state of the economy before the current Level 4 lockdown and that the contraction in Q3 will be shallow. It also reinforces the belief that the RBNZ will raise interest rates from its emergency setting of 0.25% next month. 

The only question is whether it will be a 25bps lift in interest rates or a 50bp hike. While a 50bp hike appears warranted, reflecting the uncertainty provided by the current Covid outbreak, the interest rate market has settled post the GDP data to be pricing in 35bp of rate hikes for the October 6th meeting.

The NZDUSD (which holds one of the largest positions in G10 FX currently) rallied 20 pips after the data from .7120 to .7140 before settling back at .7130 at the time of writing. 

There remains a cluster of resistance at .7140 up to .7170, including the 200-day moving average and trend channel resistance that the NZDUSD needs to clear to indicate the current correction is complete and the NZDUSD is ready to take another leg higher towards .7300c. 

NZDUSD Daily Chart

Source Tradingview. The figures stated areas of September 16th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Build your confidence risk free

More from Forex

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.