NZD/USD in Risk of New 2+ Year lows, Despite Upbeat Q2 GDP


NZD/USD Analysis

The New Zealand economy expanded by 1.7% q/q in the second quarter, in a vast improvement over the 0.2% contraction it had registered in Q1. On a year-over-year basis, GDP grew by just 0.4%, compared to 1.2% prior, but the figure was still better than expected.

Today's release underlines the resilience of the economy, while the labor market is very strong, as Unemployment stood at 3.3% in Q2. This has allowed the central bank (RBNZ) to carry on with its aggressive monetary tightening and stay hawkish, in order to fight inflation, which soared to 7.3% in Q2.

The Reserve Bank of New Zealand delivered its seventh rate hike last month and fourth consecutive of 50 basis points, bringing the official cash rate (OCR) to 3% [1]. Officials had pointed to more moves ahead and upgraded their forecasts, projecting the OCR at 3.7% by the end of the year. [2]

NZD/USD however remains at the mercy of the US Dollar and hit the lowest level since May 2020 on Tuesday, after the hot CPI inflation report from the United States.

Markets largely expect another outsized 75 basis points rate increase by the Fed next week, but Tuesday's report has put an even bigger 1% move in play, with CME's Fed Watch Tool assigning probabilities of 70% and 30% in those two outcomes respectively. [3]

The Kiwi is now vulnerable to 0.5939-20 region, although sub-0.58400 moves may prove elusive in the near-term. On the other hand, NZD/USD catches a breath today and it may get the chance to reclaim mid-0.6000s, but a strong catalyst will be required in order to surpass the EMA200 that would pause downside bias.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



Retrieved 15 Sep 2022


Retrieved 15 Sep 2022


Retrieved 19 May 2024

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.