NZD/USD bulls look to 0.7150 on strong New Zealand Q2 GDP
|- NZD/USD jumps over 20 pips following the better-than-forecast NZ GDP.
- New Zealand Q2 GDP came in 2.8% QoQ, 17.4% YoY.
- Risk-on mood favors Antipodeans even as AUKUS deal, covid woes and Fed fears challenges optimists.
- Aussie jobs report, US Retail Sales will be the key data to watch, risk catalysts are important too.
NZD/USD extends the previous day’s upbeat momentum beyond 0.7100, up 0.30% around 0.7130 after New Zealand’s (NZ) second-quarter (Q2) GDP was released during Thursday’s Asian session. The kiwi pair cheered upbeat sentiment and US dollar pullback the previous day but the bulls were probed by geopolitical headlines concerning China during early Asia.
NZ Q2 GDP rose past 1.3% QoQ forecast to 2.8% while the previous readings were revised down to 1.4% versus 1.6%. Further, the YoY figures were brighter, as expected, while rising to 17.4% from upwardly revised 2.9% previous readouts and 16.3% market consensus.
Read: Breaking: New Zealand GDP smashes expectations at 2.8% vs 1.3% exp QoQ
Earlier in the week, the New Zealand Institute of Economic Research (NZIER) revised down near-term GDP forecast but keeps saying, “Annual average growth in GDP is forecast to remain at 4.5 percent for the year to March 2023.”
It’s worth mentioning that the firmer QoQ figures reject the fears of a downbeat GDP and joins the previously released strong inflation and jobs report to inflate the odds of the Reserve Bank of New Zealand (RBNZ) rate hike during this year. Hence, NZD/USD bulls have scope to rise further and refresh the monthly top.
However, the fears concerning the next week’s US Federal Open Market Committee (FOMC) meeting and the recent US-UK-Australia security pact to tease China seem to challenge the bulls.
While the softer US Consumer Price Index (CPI) joined the line of the downbeat US jobs report to fade the Fed tapering woes, China’s US embassy recently reacted to the Western friends’ alliance saying, “The three should shake off their cold war mentality and ideological prejudice.”
It’s worth noting that the market sentiment remained positive the previous day amid receding odds of the Fed tapering and vaccine optimism even as US-China tussles, over Taiwan, joined the virus woes to tame the optimism.
That said, S&P 500 Futures print mild gains following a positive closing by the Wall Street benchmarks, which in turn adds to the NZD/USD strength.
Looking forward, geopolitical factors and virus updates may entertain NZD/USD traders ahead of Australia’s August employment report and US Retail Sales. Overall, the bulls are likely to keep the reins but it all depends upon the next week’s Fed meeting.
Technical analysis
Although sustained trading beyond 100-DMA, near 0.7075, keeps NZD/USD buyers hopeful, they need a daily closing beyond 200-DMA level of 0.7120 to dominate.
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