NZD/USD: Trading the New Zealand GDP June 2012

The New Zealand GDP is a key indicator which  measures production and growth  in the economy. Analysts consider GDP one the most important indicators of economic activity.  New Zealand GDP  is published every quarter,  magnifying the importance of  each release.  A reading which is higher 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 provides an excellent indication of the health and direction of the New Zealand economy. Traders should pay particular attention to the indicator, as any unexpected reading could change the direction of NZD/USD.

GDP has been in positive territory since 2011, and the Q4 reading for 2012 recorded a modest increase of 0.2%. The market forecast for  Q1 is slightly higher, with an estimate of 0.3%. Will the indicator surprise the markets with a strong reading?

Sentiments and levels

June has been kind to the kiwi, but traders should keep in mind  that May was brutal, as the currency has shown great  volatility.  With  the  Euro-zone  in financial turmoil  and the US showing some signs of slowing down, investors will  be likely be drawn towards the safe haven currencies, at  the expense of “risk currencies” such as the New Zealand dollar.  However, a strong GDP figure could  give a quick boost to the kiwi.  Thus, the overall sentiment is bearish on NZD/USD towards this release.

Technical levels, from top to bottom: 81.85, 80.60, 80, 79, 78.12, and 77.23.

5 Scenarios

1. Within expectations:  0.0% to 0.6%. In such a scenario, the NZD/USD is likely to rise within  range, with a small chance of breaking higher.
2. Above expectations: 0.7% to 1.0%: An unexpected higher reading can send the pair above one resistance line.
3. Well above expectations: Above 1.0%: An unexpected surge in  GDP  would  likely push  NZD/USD upwards, and a second  resistance line  might be broken  as a result.
4. Below expectations:  -0.4% to -0.1%: A  contraction in  GDP could  hurt the kiwi  and push the pair below one support level.
5. Well below expectations: Below -0.4%. In this scenario, the NZD/USD could break a second support level.

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