Soft GDP weighs on NZD further

The New Zealand dollar has continued to pull back against the greenback on more soft economic data.

New Zealand dollar
Source: Bloomberg

Further pressure was added from the disappointing GDP figures this morning.

New Zealand’s economic growth in Q3 was at 3.2% year-on-year, down from 3.9% in Q2.

NZD/USD was already facing some weakness after yesterday’s data showed that the current account deficit widened to $5.01 billion in Q3, from $1.08 billion in Q2.

The divergence between the pair had widened due to the release of the Federal Open Market Committee (FOMC) meeting minutes.

The hawkish overtones of the FOMC’s statement sparked a rally in the greenback.

From a fundamental perspective, further weakness in the Kiwi dollar can be expected.  Amid falling commodity prices and sluggish export demands, New Zealand’s central bank has been reiterating that the high level of the kiwi dollar was unjustifiable and unsustainable.

On a daily chart, NZD/USD appears to be trading between downward channels and respecting the trend lines. Immediate support is seen at the one-year low of 0.7660 recorded earlier this month, while the 0.7800 area might offer resistance on the upside.

Further improvement in tonight’s US initial jobless claims (9.30pm Singapore time) and Services PMI (10.45pm Singapore time) will see the downward momentum accelerating.

Click to enlarge

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.