When is New Zealand GDP report and how could it affect NZD/USD?

Early Thursday in Asia (21:45 GMT on Wednesday elsewhere), the market sees third quarter (Q3) Gross Domestic Product (GDP) data from New Zealand. With the recent weakness in early indicators like ANZ Light Traffic Index and dairy data, investors will be keen on observing as to how the growth number can affect the Reserve Bank of New Zealand (RBNZ) decision later in the month. The forecast suggests, GDP to strengthen to 0.6% versus 0.5% prior on a QoQ basis, which in turn will lead to 2.4% YoY number against 2.1%.

Along with the GDP, November month Trade Balance, Imports and Exports will also be released at 21:45 GMT. Expectations for the headlines Trade Balance indicate $-0.875M versus $-1013M prior.

The Australia and New Zealand Banking Group (ANZ) provides the details of GDP while anticipating fireworks:

Perhaps local GDP data will provide some domestic fireworks today, though if it does it’ll be a surprise to us, with our expectation of 0.5% q/q (2.3% y/y) about par. Services are perhaps the wild card. Even if the headline is dull there could be some nerdy interest in the historical revisions. Based on indicators such as the ANZ Light Traffic Index we wouldn’t be surprised to see growth revised higher over 2017 but lower subsequently. That implies worse momentum from a better starting point. But historical revisions tend to come out in the wash when it comes to the RBNZ’s estimates of the output gap. Much more important is the fact that momentum in the economy has clearly lifted in Q4.

Westpac says:

Conditions were mixed over the quarter. Retailing, manufacturing and business services saw solid gains, while forestry, travel and personal services were soft. Annual revisions will lift the level of nominal GDP growth in recent years, though the impact on real activity is unclear. GDP growth has slowed over the course of this year, but there are tentative signs that we have reached a low point. Our GDP forecast is likely to be within the range of other market forecasts but is stronger than the Reserve Bank’s estimate of 0.3%. We expect the current account deficit to hold steady at 3.4% of GDP, with weaker exports offset by a smaller investment income deficit.

How could the GDP affect NZD/USD?

Considering the recently increasing odds for the RBNZ’s rate cut and downbeat signals for the GDP, a surprise outcome will be helpful for the NZD/USD pair to holds its latest strength. The momentum could gain additional support if the trade numbers also please the Bulls.

Technically, prices remain strong unless breaking below the 200-day Simple Moving Average (SMA) level of 0.6532. On the upside, the recent top near 0.6635 can offer immediate resistance ahead of 0.6700 round-figure.

Key notes

NZD/USD headed towards 200-DMA ahead of Q3 GDP

About New Zealand Gross Domestic Product (GDP)

The Gross Domestic Product released by the Statistics New Zealand is a measure of the total value of all goods and services produced by New Zealand. The GDP is considered as a broad measure of New Zealand economic activity and health. Generally speaking, a high reading is seen as positive (or bullish) for the NZD, while a falling trend is seen as negative (or bearish) for the NZD.