New Zealand Gross Domestic Product beat expectations by a mile coming in at 2.8% vs 1.3% expected for the second quarter. For the year, it also beat with a score of 17.4% vs 16.3% expected.
In a soft US dollar environment, the bird has taken off through to 0.7138 and eyes a test of 0.7150 for the sessions ahead.
''Because this data informs us on the economy’s historical starting point, it’s the one dataset that, if strong, will feed the “RBNZ has some catching up to do” vibe that has in turn seen markets price in ~15% odds of a +50bp OCR hike in October,'' analysts at ANZ bank said ahead of the data.
The NZD has rallied as follows:
Why it matters to traders?
The Gross Domestic Product (GDP), released by Statistics New Zealand, highlights the overall economic performance on a quarterly basis. The gauge has a significant influence on the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, in turn affecting the New Zealand dollar.
A rise in the GDP rate signifies an improvement in the economic conditions, which calls for tighter monetary policy, while a drop suggests deterioration in the activity. An above-forecast GDP reading is seen as NZD bullish.
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