When is the NZ Q2 GDP and how could it affect NZD/USD?

NZ Q2 GDP Overview

Thursday's economic docket highlights the release of the second-quarter NZ Gross Domestic Product (GDP) report, scheduled at 10:45 GMT. Having witnessed a 1.2% YoY jump in economic activities during the previous quarter, market players might not get delighted with the estimation of the Q1 GDP figures, an expected 0.2% YoY, as it is insufficient to back the Reserve Bank of New Zealand (RBNZ) for more rate hikes. More interestingly, the QoQ figures are expected to display a significant growth of 1.0% against a contraction of 0.2%.

It is highly observed that RBNZ Governor Adrian Orr is more worried over soaring price pressures rather than saving the economy from a stagnant phase, a meaningful expansion in GDP numbers will trim trouble for the central bank. The RBNZ is consecutively squeezing liquidity from the economy by hiking its Official Cash Rate (OCR), which has reached 3%.

How could it Affect NZD/USD?

The recent carnage in commodity-linked currencies after the release of the US Consumer Price Index (CPI) data is not providing much room for a quick recovery. A release of higher-than-expected headline inflation and core CPI reading has strengthened the odds of a bumper rate hike by the Federal Reserve (Fed) in September. Investors should brace for at least a 75 basis point (bps) rate hike to combat the inflation monster.

Ross J Burland, Editor FXStreet, outlined important technical levels to trade the NZD/USD pair: “the W-formation's support is key. If the bulls commit, then the price will be destined for structure and resistance near the 38.2% Fibonacci level ahead of a 50% retracement thereafter. This is a level that meets the bounce halfway through the sell-off (the green candle) where the 78.6% Fibonacci meets where prices were agreed, so this would be expected to act as the firmest of the resistances.”

Key Notes

NZD/USD remains depressed below 0.6000 mark, lowest since May 2020

 NZD/USD Price Analysis: Bulls eye a move to the 38.2% Fibo and beyond

About NZ GDP

The Gross Domestic Product Annualized released by the Statistics New Zealand shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the NZD, while a low reading is negative.