Soft 4Q New Zealand GDP to Tame Post-FOMC NZD/USD Rebound

New Zealand GDP to Expand Annualized 3.2%- Slowest Since 1Q 2016.

Will a Reserve Bank of New Zealand (RBNZ) Continue to Endorse a Wait-and-See Approach in March?

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Trading a News: New Zealand Gross Domestic Product (GDP)

New Zealand’s 4Q Gross Domestic Product (GDP) news might criticise a near-term miscarry in a NZD/USD sell rate as a enlargement is projected to boost an annualized 3.2% after expanding 3.5% during a three-months by September.

What’s Expected:

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Why Is This Event Important:

Signs of a negligence economy might prompt a Reserve Bank of New Zealand (RBNZ) to adopt a some-more discreet tinge during a subsequent process assembly on Mar 23, and Governor Graeme Wheeler might demeanour to serve support a genuine economy before his depart in Sep as officials advise ‘numerous uncertainties remain, quite in honour of a general outlook, and process might need to adjust accordingly.’ However, a RBNZ appears to be in no rush to adjust a stream stance, and a executive bank might continue to validate a wait-and-see proceed for financial process as ‘inflation is approaching to lapse to a median of a aim rope gradually, reflecting a strength of a domestic economy.’ In turn, a uninformed remarks from Governor Wheeler and Co. might keep a New Zealand dollar afloat should a executive bank uncover a incomparable eagerness to gradually pierce divided from a easing-cycle.

Expectations: Bearish Argument/Scenario

Subdued salary enlargement interconnected with a slack in domicile expenditure might beget a muted GDP report, and a noted slack in mercantile activity might drag on a kiwi-dollar sell rate as it encourages conjecture for additional financial support.

Risk: Bullish Argument/Scenario

Nevertheless, a alleviation in a terms of trade accompanied by a ongoing enlargement in private-sector lending might coax a better-than-expected GDP print, and an astonishing pickup in mercantile activity might trigger a bullish greeting in a New Zealand dollar as it boosts interest-rate expectations.

How To Trade This Event Risk(Video)

Bearish NZD Trade: Growth Rate Slows to Annualized 3.2% or Lower

  • Need a red, five-minute candle following a recover to cruise a brief NZD/USD position.
  • If marketplace greeting favors a bearish kiwi trade, sell NZD/USD with dual apart position.
  • Set stop during a near-by pitch high/reasonable stretch from cost; during slightest 1:1 risk-to-reward.
  • Move stop to entrance on remaining position once initial aim is met, set reasonable limit.

Bullish NZD Trade: New Zealand GDP Exceeds Market Forecasts

  • Need a green, five-minute candle to preference a prolonged NZD/USD trade.
  • Implement same plan as a bearish New Zealand dollar trade, only in reverse.

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Potential Price Targets For The Release

NZD/USD Daily

NZD/USD Daily Chart

Chart – Created Using Trading View

  • NZD/USD might theatre a incomparable miscarry following a Federal Open Market Committee (FOMC) seductiveness rate decision as a span fails to exam a Dec low (0.6862), while a Relative Strength Index (RSI) threatens he bearish arrangement carried over from a prior month; need a break/close above a Fibonacci overlie around 0.7040 (505% retracement) to 0.7060 (38.2% retracement) to open adult a subsequent topside segment of seductiveness around 0.7100 (38.2% expansion) to 0.7120 (50% retracement).
  • Interim Resistance: 0.7520 (50% retracement) to 0.7530 (78.6% retracement)
  • Interim Support: 0.6840 (38.2% retracement) to 0.6870 (50% retracement)

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Impact that a New Zealand GDP news has had on NZD/USD during a final release

3Q 2016 New Zealand Gross Domestic Product (GDP)

NZD/USD 15-Minute

NZD/USD Chart

New Zealand grew an annualized 3.5% during a three-months by September, while a 2Q reading was practiced simulate a 3.4% rate of enlargement contra an initial imitation of 3.6%. The enlargement was mostly led by a 2.1% pickup in building activity, with private-sector expenditure also climbing 1.6%, while plantation outputs narrowed 1.6% during a same period. The array of churned information prints sparked a muted reaction, with NZD/USD mostly consolidating via a day as a span sealed during 0.6903.

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— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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