NZD back in focus ahead of GDP

The Kiwi dollar remains in focus this week after having gone a leg higher last week on the back of the RBNZ’s rate hike decision. 

NZD
Source:Bloomberg

NZD/USD rallied to 0.8700, but has since pulled back to trade a touch below the 0.8700 barrier. I feel we are likely to see some consolidation around this level as we head towards the back-end of the week when activity ramps up. On Wednesday we have New Zealand’s current account data followed by the GDP reading on Thursday. The current account reading is expected to show a big improvement, turning from a deficit to a 1.42 billion surplus. Thursday’s GDP reading is expected to come in at +1.2%, which is also a solid improvement from the previous +0.9% growth. Should both readings come in as strong as the market expects, then this should underpin further NZD gains.

At the same time traders will have to contend with the results from this week’s Fed meeting which looks like it could bring some excitement. Recent strength in the US dollar suggests the market is positioned for some slightly hawkish bias. If this doesn’t materialise then we could easily see the US dollar start to unwind and have a net-positive effect on the pair.

As a point of reference, 0.8780 will be a key near-term level to keep an eye on. This is where May highs were, and is also the highest since August 2011. I’ll be watching this level closely in the near term along with support at 0.8600, which is the 23.6% retracement of the February to May rally. This will be a key range this week.

NZD
Source:Bloomberg

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.