NZDUSD rises 0.18% amid contrasting economic data from New Zealand and the US

NZDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0.18%	11.3 Pips
Week to-date	0.74%	45.7 Pips
September	-0.85%	-53.5 Pips

Upcoming key events (London Time)

Wed 11:45 PM NZD GDP (3-mth)

What happened lately

New Zealand’s economy faced a notable downturn in the second quarter, as evidenced by the sharply negative GDP figures. According to Stats NZ, the GDP for Q2 plunged to -0.2%, a significant decline from the revised 0.1% in Q1. Over a 12-month period, the GDP dipped into the negative at -0.5%, in stark contrast to the revised 0.5% in Q1. These figures highlight a contraction in economic activity, indicating potential challenges ahead for the New Zealand economy. This decline could raise concerns about the country’s economic stability and might prompt the Reserve Bank of New Zealand to reassess its monetary policies.

In contrast, the United States showed a mix of positive and negative economic indicators. The Federal Reserve’s interest rate projections for the first and second years dropped to 3.4% and 2.9% respectively, compared to the previous rates of 4.1% and 3.1%. Similarly, the immediate Fed interest rate decision saw a reduction to 5%, down from the previous 5.5%. These lower projections suggest a potentially more accommodative monetary policy in the near term. However, the longer-term projection rose slightly to 2.9% from 2.8%. Concurrently, August data from the Census Bureau indicated a rise in building permits to 1.475 million and housing starts to 1.356 million, signaling strength in the housing sector. Industrial production also improved to 0.8% from -0.6% in July. Retail figures were mixed, with the retail trade control group dropping to 0.3%, and retail trade excluding automobiles declining to 0.1% from 0.4%.

The recent economic data from both New Zealand and the United States is likely to impact the NZDUSD currency pair. The contraction in New Zealand’s GDP suggests economic fragility, potentially putting downward pressure on the NZD. On the other hand, the U.S. economic indicators present a mixed scenario. While lower interest rate projections might initially weaken the USD, improvements in housing data and industrial production could offset some of this weakness. The overall effect could result in a restrained upward movement in the NZDUSD pair, especially considering the recently observed 0.18% rise to 0.62098. However, the final direction will depend largely on how market participants weigh the contrasting economic signals from both countries.

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What can we expect from NZDUSD today?

NZDUSD on Wednesday rose 0.18% to 0.62098. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for NZDUSD looks bullish as the pair ended higher after Wednesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.62557 with break above could target R2 at 0.63017 or figure level area. While towards the downside, we are looking at daily low of 0.61874 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.62675 may suggest continuation after recent positive movement.

For the week to-date, take note that NZDUSD is bullish as the pair continued to trade higher and is up by 0.74% over the past few days.

Key levels to watch out:

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