New Zealand dollar flies despite GDP miss

The New Zealand dollar has edged higher on Thursday. NZD/USD is trading at 0.6855, up 0.24% on the day. The pair jumped 0.99% on Tuesday, buoyed by optimism over developments in China and Ukraine.

New Zealand GDP posted a strong 3.0% gain QoQ in the fourth quarter. This fell short of the consensus estimate of 3.2%, but nonetheless marked an impressive turnaround from the -3.6% slide in Q3. The data confirms that the economy rebounded after Covid lockdowns hampered the economy in the third quarter.

The Chinese government has intervened after the meltdown in the country’s stock markets. Beijing announced it planned to boost the economy through monetary and loan policies which would spur growth. The announcement boosted Chinese stock markets on Wednesday, with the Hang Seng soaring 9.1%. The news also sent the New Zealand dollar soaring, as China is New Zealand’s biggest export market.

There was more positive news for the risk-sensitive New Zealand currency, as a peace plan in Ukraine appears to have made significant progress. We’ve seen reports of progress in the negotiations, only to be disappointed, and the fighting has not let up. Still, both Russian and Ukraine officials sound more optimistic about a deal, which has raised risk appetite.

Fed raises rates, revises dot plot

The Federal Reserve did not surprise anyone with its 0.25% hike, the first rise in rates since 2018. What was more of interest to the markets was the FOMC dot plot, which projected another six rate hikes this year. The dot plot also forecasted that rates would rise to around 3% by the end of 2023, sharply higher than the 1.60% estimate in December. Fed Chair Powell said that a taper of the balance sheet could start as early as May. Together with the upcoming rate hikes, this shows that the Fed plans to be aggressive in its tightening.

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NZD/USD Technical

  • NZD/USD has support at 0.6764 and 0.6716
  • There is resistance at 0.6893 and 0.6974

 

 

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

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

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