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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Market update: New Zealand dollar aims higher on GDP surprise as China eases lockdowns

APAC sentiment to benefit from Wall Street recovery and easing China lockdowns and NZD/USD is rising, but the technical outlook remains bearish after steep losses.

Source: Bloomberg

Thursday’s Asia-Pacific outlook

New Zealand’s second-quarter gross domestic product (GDP) growth rate crossed the wires. The Kiwi dollar was largely unfazed by the print, with NDZ/USD holding onto modest overnight gains. The island nation saw annual GDP growth of 0.4%, down from 1.0% in Q1. From the prior quarter, GDP grew 1.7% after a 0.2% contraction in the first quarter. The third quarter should offer a better gauge for the New Zealand economy, as travel curbs remained in place until August. Rate traders see the Reserve Bank of New Zealand (RBNZ) hiking by 50-basis points next month.

Asia-Pacific markets may open mixed following a rebound in New York. US stock indexes closed slightly higher, with the benchmark S&P 500 posting a 0.34% gain. Short-term Treasuries sold off, while the 10- and 30-year tenors saw some buying. That deepened the 2s10s yield curve inversion, indicating higher recession odds. The US producer price index (PPI) for August fell 0.1% from the prior month, dragging the annual rate down to 8.7% versus the 8.8% consensus estimate and down from 9.8% in July. The PPI data offers an optimistic signal for broader inflation. Gold fell despite the weaker USD, and bullion remains at risk of a larger breakdown.

The Japanese Yen rose against the dollar, although USD/JPY remains above the 143 level, near its multi-decade low. In the biggest action yet, the Bank of Japan performed a rate check on Wednesday. The Yen rose after the news crossed the wires, serving as a possible precursor to direct intervention. JPY shorts are likely reducing their bets against the currency, with the 145 level identified as a potential line in the sand for the Ministry of Finance.

The city saw 35 local Covid cases for Tuesday, down from 44 the day prior. Industrial metals and demand-sensitive commodities responded to the positive news. Iron ore prices closed higher in China, rising to 732 Yuan a ton. The Australian dollar stands to benefit if iron ore prices continue rising. WTI crude and Brent crude oil prices gained, moving over 1% higher. The US Energy Information Administration reported a 2.4-million-barrel build in crude oil stocks.

NZD/USD technical outlook

NZD/USD is trading within 1% of its 2022 low set yesterday at 0.5976. A break below that level would expose prices to levels not traded since May 2020. And the short-term outlook is bearish, with prices below their major moving averages.

Bulls would need to rally above the 26-day Exponential Moving Average (EMA) before attacking the 50-day Simple Moving Average (SMA). However, the MACD and RSI oscillators are tracking below their respective midpoints. A break below 0.5976 would threaten a trendline from January.

NZD/USD daily chart

Source: TradingView

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This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa 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.

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