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  • NZD/USD: strong Q2 GDP figures support Kiwi higher for now.
  • NZD/USD: positive global risk sentiment underpins commodity-complex.

NZD/USD extended its gains following yesterday’s surprise GDP data, despite the results likely to be temporary. Analysts at ANZ yesterday explained that yesterday’s print was “boosted by temporary factors”, although, the “underlying strength in the print “will give the RBNZ some breathing room to continue to “watch, worry and wait””.

“The data will give the RBNZ space to remain in data-watching mode, seeking further clarity about the strength of economic momentum into the second half of the year, with concerns about domestic demand already casting a shadow over today’s strong print,” the analysts explained, adding, “While the data provides some reassurance, the RBNZ will not be complacent about downside risks – The economy is grappling with headwinds, recent drivers of growth are waning, and there is a risk that downbeat business expectations become self-fulfilling – with employment and investment having turned negative.”

Finally, the analysts argued that at the OCR review next week, they expect that the RBNZ will reiterate their willingness to do what it takes to support the economy, restating that the next move in the OCR could be “up or down”.”

Price action all one way

The price action today was pretty much all one way until liquidity dried up and the price momentum stalled at 0.6693 with the bird now in full flight above the trend line resistance – “We retain a medium-term bearish bias, but don’t think now is the time to fade this move just yet,” the analysts at ANZ argue.

NZD/USD levels

Support located at 0.6650 and resistance is located at 0.6720. The trend line resistance has been left behind and eyes are on 0.6850. However, 0.6711 would be the 76.4% retracement of the daily downtrend from 0.7393. The next target would be the 61.8% retracement target of the same sell-off at 0.6841 (this falls in line with the lows of 15th May). A continuation of the downside and break of 0.6500 would open up 0.6344 and 0.6306 on the wide.