New Zealand Dollar gains ground as GDP growth beats expectations
- The New Zealand Dollar strengthens after the domestic economy expands more than expected in the second quarter.
- The US Dollar remains supported by the prospect of further monetary policy tightening in the United States.
- Geopolitical tensions limit risk appetite and prevent NZD/USD from extending its rebound.
NZD/USD rebounds on Thursday, trading around 0.5730 at the time of writing, up 0.35% on the day. The New Zealand Dollar (NZD) benefits from stronger-than-expected domestic growth data, allowing the pair to recover from the two-month low reached on Wednesday.
Statistics New Zealand reported that Gross Domestic Product (GDP) expanded by 0.2% QoQ in the second quarter, exceeding market expectations for 0.1% growth, although slowing sharply from the 0.9% expansion recorded in the first quarter. On an annual basis, the New Zealand economy grew by 2.6%, accelerating from a revised 1.7% previously.
The stronger GDP figures provide some relief for the New Zealand Dollar by suggesting that economic activity remains resilient despite the slowdown from the previous quarter. However, NZD/USD struggles to extend its recovery as the US Dollar (USD) remains supported by the Federal Reserve's (Fed) hawkish monetary policy outlook.
The Fed raised its benchmark interest rate by 25 basis points (bps) on Wednesday, bringing the target range to 3.75%-4% and delivering its first rate increase since 2023. Fed Chair Kevin Warsh justified the decision by saying that inflation has remained too high for too long, while leaving the door open to further monetary tightening.
Expectations of another Fed move continue to support the Greenback. According to the CME FedWatch tool, markets currently assign around a 87% chance to at least another interest rate increase this year.
The prospect of higher US interest rates for longer could continue to limit the upside potential of NZD/USD, as wider yield differentials tend to favor the US Dollar against lower-yielding currencies.
Meanwhile, geopolitical tensions in the Middle East provide an additional source of support for the safe-haven US Dollar. The resulting cautious market environment limits demand for risk-sensitive currencies such as the New Zealand Dollar, tempering the positive impact of New Zealand's stronger GDP figures.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | 0.30% | -0.30% | 0.05% | -0.35% | -0.36% | -0.19% | |
| EUR | 0.11% | 0.41% | -0.18% | 0.18% | -0.26% | -0.22% | -0.06% | |
| GBP | -0.30% | -0.41% | -0.58% | -0.24% | -0.66% | -0.63% | -0.44% | |
| JPY | 0.30% | 0.18% | 0.58% | 0.29% | -0.07% | -0.10% | 0.08% | |
| CAD | -0.05% | -0.18% | 0.24% | -0.29% | -0.38% | -0.38% | -0.19% | |
| AUD | 0.35% | 0.26% | 0.66% | 0.07% | 0.38% | 0.03% | 0.17% | |
| NZD | 0.36% | 0.22% | 0.63% | 0.10% | 0.38% | -0.03% | 0.21% | |
| CHF | 0.19% | 0.06% | 0.44% | -0.08% | 0.19% | -0.17% | -0.21% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
Author
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
