NZDUSD initially traded lower during the Asian session after opening at 0.6569. It reached an intraday low of 0.6552 before rallying to 0.6612 following the positive GDP report from New Zealand. By the New York session close, the currency pair had settled at 0.6587.
Better-Than-Expected GDP Report
According to Statistics New Zealand, the economy grew by 0.7% for the third quarter of 2019 compared to a year ago. This number was higher than what analysts had estimated at 0.5%. On the other hand, the reading for the first quarter of the year saw a downward revision from 0.5% to 0.1%.
Nonetheless, the positive surprise from the GDP report was enough for market participants to speculate that the RBNZ may not cut rates soon. It is said that this uptick in economic growth may soon translate to higher inflation.
However, today’s trade balance report missed forecasts. Data for November showed that the value of imports exceeded that of exports by 753 million NZD. The forecast was only for a 700 million NZD deficit. The reading for October was also downardly revised from -1.013 billion NZD to -1.039 billion NZD.
NZDUSD has broken through support at a short-term trend line (from connecting the lows of November 29 and December 11). It now looks to have provided the currency pair with resistance. If resistance does hold, we could soon see NZDUSD tumble down to the medium-term trend line around 0.6535 (from connecting the lows of November 13 and November 29). The price also seems to coincide with the 100 SMA.
On the other hand, if there are enough buyers in today’s trading to break through resistance, NZDUSD could soon rally to last week’s highs around 0.6635.