- NZ GDP: q/q 0.6% vs exp. 0.8%, prev. 0.6%; y/y 2.9% vs exp. 3.1%, prev. 2.7%.
- GDP miss takes the top off NZD/USD to cap off Wednesday's trading.
The NZD/USD has bottomed out of Wednesday's trading range on a miss for New Zealand GDP figures, currently testing just above the 0.7300 handle, and the pair heads into Thursday's Asia session on the backfoot and at the mercy of teetering risk sentiment in the broader markets.
The Kiwi has been struggling to get some wheels under it as of late, and despite consistently pushing back away from the 200-day SMA remains unable to develop enough momentum to confidently continue the bull-run that kicked off last December. Economic growth continues to lag behind expectations for New Zealand, and any stretches upwards in the charts owe most of their livelihood to outright Dollar selling in broader markets rather than any intrinsic strength building up in the NZD. Political turmoil across the globe is taking the wind out of risk appetite's sails, with Trump's White House administration constantly expunging key members of the President's team in favour of new faces, The Japanese government roiling amidst a document forging scandal involving the Finance Minister Taro Aso, and on-again, off-again struggles from an opaque path forward for Brexit.
New Zealand's GDP figures for the final quarter of 2017 were a miss, though the numbers still managed to come out slightly better or at least on par with the previous figures, with year-on-year GDP coming in at 2.9%, below the expected 3.1% (likely due to flatlining in manufacturing), but still above the 2.7% posted for the previous year. The GDP release highlights the Kiwi's middling problem: underlying fundamentals are building, but at a slower pace than acceptable, and the Reserve Bank of New Zealand (RBNZ) continues to struggle in a lopsided economic environment as expectations for rate increases from New Zealand's central bank continue to get pushed back. No movement is expected from the RBNZ for the rest of 2018, and calls for a hike in early 2019 are beginning to look premature as well.
Little else of note remains on the macro calendar for New Zealand this week, and overall market sentiment will be the continued driver underpinning action in the NZD/USD.
As FXStreet's own Flavio Tosti noted, "If the resistance from 0.7340 is broken there is nothing much in the way and bulls should be able to bring the market to the 0.7400 psychological level. On the opposite side, if bears win the market will most likely push through the 0.7320 intraday support and reach the 0.7280 level, the 38.2% Fibonacci retracement, close to the 100-period SMA. If the bears have enough strength they can hope to get to the 0.7240 level, the 23.6% Fibonacci retracement."
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