The New Zealand dollar could come under bearish pressures this evening as GDP reports are anticipated to show that the New Zealand economy contracted for the third straight quarter during Q3, at a rate of -0.5 percent. This is anticipated to be the sharpest decline since Q2 2000 and worst recession since late 1997 - early 1998, as consumer spending falters and the housing sector slows. As it stand, Credit Suisse overnight index swaps are close to pricing in a 75bp cut by the Reserve Bank of New Zealand (RBNZ) on January 29, but if New Zealand GDP falls more than expected, speculation of aggressive rate cuts could rise and weigh on the New Zealand dollar. Near-term support rests at the 38.2 percent retracement level of 0.5205 - 0.6038 at 0.5721, and a break below there and the psychologically important 0.5700 mark is likely to see NZD/USD target the 50 percent retracement level at 0.5622.
Related Article: New Zealand Dollar Weekly Forecast
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