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The Gross Domestic Product (GDP), is an important measurement of the production and growth of the economy. Analysts consider GDP, which is released quarterly,  one of the most significant 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  21:45 GMT.

Indicator Background

GDP  provides an important snapshot of  economic activity,  and as such, traders should pay particular attention to  the indicator  and treat it as a market-mover.

 After an outstanding reading of 0.8% in July, the GDP slumped to 0.1% in September. The markets were caught off guard, as the September forecast  was for 0.5%. This marked the second consecutive reading that the market  prediction was well off target. Will this trend continue for a third straight quarter?

Sentiments and levels

Manufacturing and business confidence  are down, and an interest rate cut  seems likely in late January,  which would  make the New Zealand dollar less attractive to investors. Thus, the overall sentiment is bearish on NZD/USD towards this release.

Technical levels, from top to bottom: 79, 0.7840, 0.7723, 0.7637, 0.7550, 0.7470, and 0.7370.

5 Scenarios

Within expectations:  -0.1% to 0.4%. In such a scenario, NZD/USD is likely to rise within range, with a small chance of breaking higher.

Above expectations: 0.5% to 0.8%: An unexpected higher reading can send  the pair  well  above one  resistance line.

Well above expectations: Above 0.8%: The chances of such a scenario are low. Such an outcome would push NZD/USD higher, and a second  resistance line might be broken as a result.

Below expectations: -0.5% to -0.2%:   A  GDP figure lower than predicted could cause the  pair to  fall and break one level of support.

Well below expectations:  Below -0.5%. A severe contraction in GDP will pull down  NZD/USD, and  the pair could  break  two or more support  levels.

For more on the New Zealand dollar, see the  NZD/USD forecast.

 

 

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