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New Zealand  Gross Domestic Product (GDP) is a key release, released each quarter,  which measures production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is   better  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 climbed 1.1%, its best performance in over five years. This reading easily beat the market forecast of 0.5%. The markets are expecting a much smaller gain for Q2, with an estimate of 0.3%. Will the indicator again surprise the markets with a strong reading?

Sentiments and levels

The pair failed to close at higher levels despite QE3. Chinese issues remain problematic, and  slower  pace of growth in China will likely have major repercussions for the New Zealand economy. As well, the central bank in New Zealand is  carefully monitoring  the strength of the kiwi. We could see some correction at these levels.  So, the overall sentiment is  bearish on NZD/USD towards this release.

Technical levels, from top to bottom: 84.70, 84, 83.20, 82.60, 82.20, and 81.25.

5 Scenarios

  1. Within expectations: 0.0% to 0.6%. In such a scenario, NZD/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.9% to 1.2%: An unexpected higher reading can push the pair above one resistance line.
  3. Well above expectations: Above 1.2%: An surge in the reading would bolster the kiwi, and  the pair could break a  second line of resistance as a result.
  4. Below expectations: -0.4% to -0.1%: A negative GDP figure could  push NZD/USD below one support level.
  5. Well below expectations: Below -0.4%. A very weak reading would hurt the kiwi, and the pair could push below a  second level of support.

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