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Positive NZ GDP Surprise Bolsters Kiwi Value

Positive NZ GDP Surprise Bolsters Kiwi Value

Jason Shemtob,

THE TAKEAWAY: New Zealand’s GDP (4Q) numbers surpassed expectations at 1.5% QoQ and 3.0% YoY growth > Positive economic data should lessen short term economic risk, but RBNZ action still a possibility > NZD Outlook Bullish

New Zealand’s 4Q GDP numbers came in well above expectations with QoQ growth at 1.5% versus estimates of 0.9% and YoY growth at 3.0% versus estimates of 2.3%. The Kiwi jumped following the data release as investor’s fears of an economic slowdown were placated.

While the impressive GDP numbers are likely to bolster the island nation’s economic sentiment in the short term, long term concerns over economic growth remain. The northern part of the country has been in the thralls of a major economic drought, which has significantly damaged the country’s key livestock trade and could cause a fall in economic output in later months. Meanwhile the risk of a rate increase by the country’s central bank remains a mild, but reasonable concern, thanks to the dovish-toned comments recently made by RBNZ head Graeme Wheeler. Forex invetsors should keep all these factors in mind when evaluating the positive GDP numbers.

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NZD/USD (2 hour chart)

Positive_NZ_GDP_Surprise_Bolsters_Kiwi_Value__body_Picture_1.png, Positive NZ GDP Surprise Bolsters Kiwi Value

Created by Jason Shemtob Using Marketscope 2.0

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.