NZD/USD has spiked on the surprise upside numbers NZ GDP, beats RBNZ projection by 0.5%

The NZD dollar had already been riding the coattails of the Aussie that trades as a proxy to the CNH. USD/CNH dropped from 6.8703 to 6.8424, (albeit still well above the levels that some analysts in the banks had been calling for not as far back as before August's business), on the back of remarks from the Chinese Premier who said a yuan devaluation would “do more harm than good”. 

In the last moments, the Kiwi rallied through trendline resistance at 0.6620 and scored a high of 0.6652 on GDP that beat the RBNZ's estimates of 0.5%. The New Zealand April to June economic growth has come in at a beat: +1.0% q/q  expected 0.8% q/q, prior 0.5%  2.8% y/y expected 2.5% y/y, prior 2.6%, revised from 2.7%. However, while this is a promising set of data, whether it will have an important bearing on the Reserve Bank's thinking, (as boosted by temporary factors), given its low expectation of 0.5% growth and its recent comments that it is nearing the trigger point for OCR cuts, will need to be seen - but it does leave year-ended GDP growth at around 2.5%.

• New Zealand economy expanded 1.0% q/q in Q2, boosted by temporary factors - ANZ

Eyes on AUD

Elsewhere, eyes are on the AUD/USD. The Aussie is set on a test of the 76.4% fib retracement of the slide from 0.7381 to 0.7079 at 0.73 the figure, currently closing a very bullish daily stick at 0.7268 having made an overnight high of 0.7275. 

NZD/USD levels

Support located at 0.6540 and resistance is located at 0.6650. The 21-D SMA has been left behind and eyes are on 0.6685 1st July lows. However, 0.6711 would be the 76.4% retracement of the daily downtrend from 0.7393. The next target would be the 61.8% retracement target of the same sell-off at 0.6841 (this falls in line with the lows of 15th May). A continuation of the downside and break of 0.6500 would open up 0.6344 and 0.6306 on the wide.