NZD/USD: Trading the New Zealand GDP September 2013

New Zealand GDP, released each quarter, measures production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity, and thus it is eagerly awaited by the markets.  A reading which is  higher 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 22:45 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 in Q1  posted a modest 0.3% gain, well below the estimate of 0.6%.  The markets are expecting another weak release for Q2, with an estimate of  a gain of just  0.2%. Will the indicator surprise the markets and beat this prediction?

Sentiments and levels

The most recent Trade Balance release was a disaster,  as  New  Zealand posted a  deficit of -774 million dollars. This shocked the markets, which had anticipated a small deficit of just -18 million.  Even more worrisome was the fact  that the trade deficit was the first since January. On a  brighter note, consumer and  business confidence  are steady, and  recent employment releases were solid.  The kiwi has also benefited from the strong rally by AUD/USD, and has gained over four cents against the USD dollar this month. So, the overall sentiment is  neutral on NZD/USD towards this release.

Technical levels, from top to bottom: 0.8448, 0.8396, 0.83, 0.8177, 0.8106 and 0.80.

5 Scenarios

1. Within expectations: -0.1% to 0.5%. In such a scenario, NZD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations:  0.6% to 0.9%: An unexpected higher reading can push the pair above one resistance line.
3. Well above expectations: Above 0.9%: A surge in  GDP would bolster the kiwi, and the pair could break a second line of resistance as a   result.
4. Below expectations:-0.5% to -0.2%: A  weak GDP figure could push NZD/USD below one support level.
5. Well below expectations: Below -0.5%. In this scenario, the  New  Zealand dollar  would likely take a hit, and the pair could push below a second level of support.

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

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