NZD/USD: Trading the New Zealand GDP December 2014

New Zealand Gross Domestic Product (GDP) is a key release, released each quarter, which measures production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the New Zealand dollar.

Here are all the details, and 5 possible outcomes for NZD/USD.

Published on Wednesday at 21:45 GMT.

Indicator Background

New Zealand GDP is a key economic indicator, and provides an excellent indication of the health and direction of the New Zealand economy. Traders should pay close attention to the GDP release, as any unexpected reading could affect the direction of NZD/USD.

GDP  dipped in Q2 to 0.7%, its  smallest gain in four quarters.  However, this reading was good enough to beat the estimate of 0.7%. No change is expected in  the Q3 reading.

Sentiments and levels

Both the US and New Zealand economies are moving in the right direction, so these forces could be balanced and  not impact on  NZD/USD. In the US, the upcoming  Fed decision is likely to ascertain the hiking bias in 2015, but with a sense of caution. So, the overall sentiment is  neutral on NZD/USD towards this release.

Technical levels, from top to bottom: 0.7930, 0.7850, 0.78, 0.7715, 0.7615 and 0.7460.

5 Scenarios

1. Within expectations: 0.5% to 0.9%. In such a scenario, NZD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 1.0% to 1.4%: An unexpected higher reading can push the pair above one resistance line.
3. Well above expectations: Above 1.4%: A surge in the reading would bolster the kiwi, and the pair could break a second resistance line  as a result.
4. Below expectations: 0.0% to 0.4%:  A weak reading could see the pair break below one support line.
5. Well below expectations: Below 0.0%.   A negative GDP  reading could push NZD/USD below a second level of support.

For more on the kiwi, see the NZD/USD forecast.

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