Home/Central banks/FX/News events/Newsfeed/NZD/Technical analysis/USD

NZ dollar eyes first-quarter GDP

Share Print 0

The New Zealand dollar is steady on Tuesday. NZD/USD is trading at 0.6138, down 0.10% in the European session at the time of writing. US markets are closed for a holiday. New Zealand will release first-quarter GDP early on Thursday.

Is New Zealand still in recession?

There is some uncertainty over what to expect from Tuesday’s GDP report. The markets are expecting the New Zealand economy to have flatlined in the first quarter. The major New Zealand banks are divided, with some projecting a 0.1% gain while others have forecast a -0.1% decline. There is no argument, however, that the economy is in the deep doldrums, having contracted in four of the past five quarters, including the past two quarters. Another decline from Q1 GDP would extend the technical recession.

For the Reserve Bank of New Zealand, a GDP of zero or close to it points to a weak economy, which will support a rate cut sooner rather than later. The RBNZ has been hawkish, insisting that it won’t cut rates before inflation is reined in. Policy makers are willing to consider trimming rates if inflation is within the target band of 1% to 3%, even if it is above the 2% midpoint. Currently, the inflation rate is at 4.0% and that’s simply too high for the central bank to start cutting rates.

The RBNZ has held rates at 5.5% at seven consecutive meetings and another hold is likely at the next meeting on July 10th. At the May meeting, members discussed the possibility of hiking rates, but like the Reserve Bank of Australia, decided against it.

NZD/USD Technical

  • NZD/USD is tested support at 0.6130. Below, there is support at 0.6111
  • 0.6163 and 0.6182 are the next lines of resistance

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)

, ,
Back to Top