New Zealand GDP Preview: Slowdown expected. reaction depends on the Fed as well


  • New Zealand is expected to report a slowdown in Q3 2018, following Australia.
  • Low expectations provide scope for an upside surprise.
  • The Fed decision, scheduled a bit earlier, will impact the magnitude of the reaction. 

New Zealand releases its Gross Domestic Report for the third quarter of 2018 on Wednesday, December 19th, at 21:45 GMT. The small South-Pacific nation releases its GDP report only once, making every publication more impactful despite the late release, close to the end of the following quarter.

The economy grew by 1% QoQ in Q2, an impressive rate that is equivalent to over 4% annualized growth. The rapid rate of expansion in New Zealand went hand in hand with quicker paces in other countries. Year over year, the economy advanced by 2.8%.

Lower expectations, upside surprise?

Expectations for Q3 are more modest 0.6% QoQ, while YoY growth carries expectations for remaining at the same level of 2.8%.  

New Zealand's neighbor, Australia, recently published its own GDP report and it badly disappointed, coming out at 0.3% against 0.6% that had been forecast. Will we see a repeat of the same scenario? Not necessarily. The NZ labor market is doing better than the Australian one, and New Zealand is less dependent on Chinese demand. 

Lower expectations leave more room for an upside surprise. If the outcome meets early projections, 0.6% is still a decent rate of expansion that should keep the kiwi bid. 0.4% or lower would already be disappointing. 

NZD/USD reaction: The Fed sets the trend

The US Federal Reserve announces its policy at 19:00 GMT on the same day. Fed Chair Jerome Powell holds a press conference that is set to last until around 20:30 GMT. Markets are highly anticipating the Fed decision that is set to provide a meaningful reaction in the USD.

The FOMC meeting will surely move NZD/USD and will also impact the currency pair's reaction to the NZ GDP report. 

If the Fed is dovish and the USD falls, an upbeat GDP report could have a more significant effect on NZD/USD, pushing it substantially higher. But if GDP falls short after such a dovish decision, the negative impact on the pair could be limited. 

And if the American central bank is hawkish and the greenback gains, a positive growth figure may have a hard time stopping the fall of NZD/USD while a downbeat number could exacerbate the downfall.

All in all, a GDP number that goes with the trend that the Fed triggers will be more meaningful than an outcome that goes against it.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

Latest Forex Analysis

Editors’ Picks

AUD/USD: Bears in control, 11-year low back in sight amid coronavirus-led risk-off

AUD/USD stalls its recovery attempts near 0.6625 region, as the bears remain in control amid broad risk-aversion induced by growing coronavirus contagion. The spot now heads back towards the 11-year low of 0.6583 reached earlier today. 

AUD/USD News

USD/JPY struggles to keep gains above 111.50 amid risk-off

USD/JPY is trimming gains as yen sellers are struggling to absorb buying pressure amid risk-off mood in the financial markets. Investors are selling risk, possibly in response to reports stating a rise in the number of coronavirus cases outside China, especially in South Korea and Italy. 

USD/JPY News

USD/KRW rises to six-month high as coronavirus spreads into South Korea

USD/KRW remains 0.67% up to 1,217.50 by the press time of early Monday. In doing so, the pair stays near the highest levels last seen during the late-August 2019 and the reason to blame is the outbreak of coronavirus (COVID-19) in South Korea.

Read more

Gold: Better bid after biggest weekly gain since August 2019

Gold is on the offensive, having logged its biggest weekly gain in six months last week. The yelloe metal rallied by over 3.7 percent last week to print its best weekly performance since August. The bias remains bullish despite overbought readings on key indicators.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors

Cryptocurrencies

Signatures