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The surprisingly strong growth of the economy in Q1 is a very positive change in the favor of the kiwi, even if the figure was released relatively late.

The economy in this country is much more stable than currency movements show. NZD/USD has been a roller coaster pair during long periods. However, the economy has a strong base: food exports. External demand remains strong.

The RBNZ is very conscious of currency movements and certainly dislikes the strength of the currency. This will not lead to an intervention, but might trigger a rate cut in the future. We are not there yet, and the current strength of the economy raises the chances for a rate hike rather than a rate cut.

Like the Aussie, the kiwi will likely stabilize and somewhat refocus on Chinese and internal matters rather than European ones, but Europe has a tendency of staying in the limelight, and NZD is the riskiest of risk currencies, for good and for bad.

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