The New Zealand economy grew by a healthy 2.7% y/y, better than 2.4% expected in Q3 2017. In addition, the reading for Q2 was revised up from 2.5% to 2.8%. While Q3 q/q growth came out “only” at 0.6% that was expected, the current yearly levels and the prospects look bright as New Zealand enjoys its summer solstice.
NZD/USD jumped on the good news, hitting a high 0.7020. However, it was unable to breach the resistance line of 0.7030 which capped it earlier in the week. Moreover, at the time of writing, the pair is drifting back to the downside, trading just under the tough and round 0.70 line.
Can the kiwi continue higher? While the economy looks great, we still find worries about the policy of the central bank, given its new mandate from the government. They may opt for the dovish side, perhaps cutting rates, even if growth is robust.
For the more immediate term, data from the US takes centre-stage. Updates on GDP growth in the US, durable goods orders, and also inflation data will rock NZD/USD. It is also important to note that while the tax bill passed both the House and the Senate, a potential delay in its signing by President Trump and the threat of a government shutdown could derail the dollar. So, NZD/USD can still finish the year above the 0.70 level.
More: AUDJPY and NZDUSD Elliott Wave Analysis
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