NZD/USD pierces 0.7100 after upbeat New Zealand Q3 GDP

• NZD/USD jumps over 15 pips as New Zealand economy fared better in the third quarter.
• NZ Q3 GDP grew past-13.5% QQ forecast, Q2 figures are also revised up.
• Kiwi bulls earlier cheered Fed-led drama, hopes of US stimulus.
• Cautious sentiment over Capitol Hill talks chains the bulls.

Better than forecast and prior readings of New Zealand’s (NZ) third quarter (Q3) Gross Domestic Product (GDP) propels NZD/USD to 0.7117 during Thursday’s early Asian trading. The kiwi pair rises near 20 pips following the news while also cheering the post-Fed run-up and keeping eyes on the US coronavirus (COVID-19) stimulus talks.

New Zealand Q3 GDP not only crossed 13.5% forecast with 14.0% but the previous readings were also revised up from -12.2% to -11.0% QoQ.

Read: NZ GDP sa (QoQ) Q3: 14.0% (exp 12.9%; prev -12.2%)

With the upbeat GDP figures, the RBNZ bears are likely to step back, which in turn offers extra strength to the NZD/USD upside near the highest since late April 2018. Also favoring the bulls could be the US dollar weakness. The US dollar index (DXY) drops the fresh low since April 2018, just to trim some of its gains post-Fed, despite cautious statements from Chairman Jerome Powell and Company.

Other than Fed and GDP, the pair also benefits from increasing odds of the US covid stimulus, despite US President-elect Joe Biden’s comments turning down on the decision for today. Further, Brexit and covid vaccine are extra positives favoring the mood.

Alternatively, the COVID-19 resurgence in the Northern Hemisphere and the US-China tension is weighing on the sentiment.

Amid these plays, Wall Street benchmarks closed mixed while the US 10-year treasury yields stay mildly positive above 0.90%.

Looking forward, market players will keep their eyes on the Capitol Hill updates for stimulus while Australia’s employment data and headlines concerning China and the virus will also be important for fresh impulse.

Technical analysis

The quote’s successful U-turn from an ascending trend line from November 13, at 0.7062 now, keeps the NZD/USD buyers directed towards March 2018 low near 0.7150.