Early Thursday in Asia (21:45 GMT on Wednesday elsewhere), the market sees the first-quarter (Q1) 2021 Gross Domestic Product (GDP) data from New Zealand.
Today’s NZ GDP print becomes more important after the recent slowdown in the Pacific nation as well as the covid-led hit to the tourism, the key for Auckland’s income, not to forget the latest Fed-led blow. However, recent updates from the New Zealand Institute of Economic Research (NZIER) and the RBNZ are contrasting and make the case interesting for the NZD/USD traders.
The forecast suggests, GDP rise 0.5% versus the previous contraction of -1.0% on a QoQ basis, which in turn will lead to a +0.9% YoY number against the -0.9% previous readout.
Ahead of the release, the Australia and New Zealand Banking Group (ANZ) said,
New Zealand’s Q1 Balance of Payments and GDP figures are due to be released at 10:45 am next Wednesday and Thursday respectively. We’ve penciled in a small economic expansion for Q1 (0.5% q/q, 0.9 y/y), but many of the industry-level indicator models that didn’t do so well last quarter still haven’t settled down enough to start putting too much weight on them.
Westpac follows the footsteps while saying:
We expect a 0.6% rise in GDP for the March quarter, following a fall of 1.0% in December. While the absence of international tourism is likely to continue disrupting the seasonal patterns in the data, the domestic economy continues to be supported by a strong housing market which many sectors have benefitted from.
NZD/USD bears the burden of the US Federal Reserve’s (Fed) optimism as sellers attack 0.7050, the lowest since mid-April, ahead of the event on Thursday morning in Asia. The pair sellers are also worried as a negative surprise from today’s NZ GDP will mark the technical recession for the Pacific nation. However, the RBNZ and the NZIER forecasts have already suggesting recovery going forward, which in turn suggests a weaker-than-fears downside to the NZD/USD prices if at all the NZ GDP figures remain negative. It’s worth noting that the post-Fed plunge in the Kiwi pair also raises doubts over the pair’s further declines and increase odds of a notable corrective pullback on upside GDP release.
Technically, NZD/USD is well below the key supports surrounding 0.7100, not to forget early April tops near 0.7070, suggesting further weakness towards the yearly bottom of 0.6955 marked in March. However, the 0.7000 psychological magnet may offer an intermediate halt to the quote.
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The Gross Domestic Product released by the Statistics New Zealand is a measure of the total value of all goods and services produced by New Zealand. The GDP is considered as a broad measure of New Zealand economic activity and health. Generally speaking, a high reading is seen as positive (or bullish) for the NZD, while a falling trend is seen as negative (or bearish) for the NZD.
