FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%

Kiwi awaits New Zealand's GDP data as crisis fades


17 March 2021

Economic growth figures for Q4 out of New Zealand will hit the markets at 21:45 GMT Wednesday. Forecasts suggest that the economy has recovered all its losses from the crisis, even though the struggling tourism industry likely held back growth this quarter. As for the kiwi, the overall picture remains positive, particularly against the euro and the yen.

Complete recovery

New Zealand was essentially the first nation to defeat the virus, without even vaccinating anyone. An early and tight lockdown resulted in zero cases on the island since last summer, and the government kept the nation’s borders closed to ensure the situation stays that way. Meanwhile, it enacted powerful relief programs to support businesses and jobs.

As a result, the economy has made a stunning recovery. GDP numbers suggest that economic activity was already back at pre-pandemic levels in the third quarter of 2020, employment and inflation have been stronger than expected, and the housing market is booming. Additionally, commodity prices have surged, spelling good news for exporters.

Of course, it’s not all rosy. Some covid cases have been reported lately, resulting in brief lockdowns in some of the major cities. Similarly, vaccinations have just started, so New Zealand is way behind in the global immunization race. Still, the overall picture for the economy and public health is much better than most other regions, Europe in particular.

Lack of tourism restrains growth

Turning to the upcoming dataset, economic growth likely cooled towards the end of the year. GDP is expected to have risen just 0.1% in Q4 from the previous quarter, which would bring growth to 0.5% from a year ago.

The relatively soft performance likely comes down to the tourism sector. The hospitality sector is struggling because the nation’s borders are still shut, and the December quarter is typically the strongest period for tourism given the warm weather in New Zealand.

Having said that, GDP being higher from a year ago is still an incredible achievement, considering the global crisis.

What’s the outlook for the kiwi?

The knee-jerk reaction in the kiwi will depend on any surprises in the GDP numbers, though the overall picture for the currency seems positive. The domestic economy is solid, commodity prices are elevated, and some benefits from the enormous US stimulus packages are likely to spill over into exporting economies like New Zealand. Markets are now pricing in a 50% probability for an RBNZ rate hike by this time next year.

The catch is that the outlook for the US dollar is also bright. America has accelerated its vaccination program and the economy is about to enjoy a stimulus-fuelled boom. The Fed may be among the first central banks to raise rates again.

In contrast, most of the Eurozone is still locked down, the vaccination rollout has been a mess, and the ECB has made it clear that it won’t allow European yields to rise much. It will probably be among the last to raise rates this cycle, if it does at all. The Bank of Japan is a similar story.

As such, euro/kiwi and kiwi/yen may be better proxies than dollar/kiwi for any future gains in the New Zealand dollar. Taking a technical look at euro/kiwi, further declines could encounter initial support near the recent two-year low of 1.6315. A downside break would turn the focus towards the 1.6235 zone, marked by the peak of May 2017. On the upside, the first target for buyers would be the 1.6750 area, which also encompasses the 50-day moving average. If violated, resistance may then be found around the 1.7050 region.

#source

Related

NZD: Buy the Rumor sell the fact?
NZD: Buy the Rumor sell the fact?

The RBNZ confirmed a 25-basis-point rate raise, which had been widely anticipated and already factored into the markets. The NZD, however, did not benefit from the boost...

14 Oct 2021

NZD/USD pares intraday gains, up little around 0.6915-20 area
NZD/USD pares intraday gains, up little around 0.6915-20 area

The risk-on impulse provided a modest boost to the perceived riskier kiwi on Thursday. Hawkish Fed expectations acted as a tailwind for the USD and capped gains for the pair...

7 Oct 2021

The Kiwi is falling
The Kiwi is falling

NZDUSD is being sold after the RBNZ meeting. The New Zealand Dollar is falling against the USD. The current quote for the instrument is 0.6880. During its October meeting...

6 Oct 2021

Trade of the Week: NZD sinks on single covid case. Can the kiwi recover?
Trade of the Week: NZD sinks on single covid case. Can the kiwi recover?

Entering this trading week, the New Zealand dollar had a roaring start to August, being the best-performing G10 currency against the US Dollar so far this month...

18 Aug 2021

RBNZ meeting in the spotlight
RBNZ meeting in the spotlight

Kiwi burned by doubts about RBNZ rate hike tomorrow - US stocks hit new records, Chinese equities get smoked - Dollar braces for US retail sales and Powell speech...

17 Aug 2021

RBNZ rate hike to send AUDNZD to 16-month low?
RBNZ rate hike to send AUDNZD to 16-month low?

Currency markets remain focused on the US dollar amid heightened expectations that the Fed will might well have to taper sooner rather than later...

16 Aug 2021


Editors' Picks

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
Vantage FX information and reviews
Vantage FX
78%
Moneta Markets information and reviews
Moneta Markets
77%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.