New Zealand Dollar Extends Declines Following Fourth Quarter GDP Data
- New Zealand GDP growth met expectations at 0.9% in 4Q vs. 0.9% Expected, 1.3% Prior
- Annual growth rate expanded at a Slower Rate (3.1%) Compared to a year earlier
- Risk sentiment likely to offer directional guidance for the Kiwi during the session ahead
The New Zealand Dollar dropped after the release of GDP growth figures which met forecasts at 0.9 percent for the fourth quarter of 2013, while the prior third quarter print was revised lower to 1.2 percent from 1.4 percent. Additionally, the year-on-year reading for Gross Domestic Product came in-line with expectations of 3.1 percent compared to 3.3 percent (revised from 3.5 percent) a year earlier.
The NZD/USD fell by 34 pips from 0.8570 to 0.8536 which may reflect speculation from traders that the Reserve Bank of New Zealand may hike rates less aggressively than previously anticipated in light of the fall in economic growth. However, the impact on the Kiwi may be short-lived given RBNZ Governor Graeme Wheeler raised the official cash rate by 25 bps last week noting that the “economic expansion had considerable momentum”.
Looking to the session ahead, the high-yielding currency will likely take cues from broader-risk trends. A softening of investor sentiment on the back of a hawkish lean from the FOMC overnight may continue to weigh on the Kiwi during Asian trading. According to Daily FX Currency Strategist Ilya Spivak, a break below 0.8582 exposes 0.8517 support.
NZD/USD (5 Min Chart) - Created By Daniel Giardina using Marketscope 2.0
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