NZD/USD: Trading the New Zealand GDP June 2014

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 continues to post strong numbers, with a 0.9% gain in Q4, just shy of the estimate of 1.0%. The markets are anticipating good news in Q1, with the estimate standing at 1.2%. Will the indicator follow and beat the prediction?

Sentiments and levels

Despite some recent bumps, the New Zealand economy continues growing at a strong rate and is enjoying balanced growth and a determined central bank,  which raised interest rates earlier in the month. Even though the US economy enjoys the same momentum, the calm environment allows for the higher yielding kiwi to emerge as a winner. A strong GDP release is expected, and this could certainly strengthen the kiwi, perhaps after some quick consolidation. So, the overall sentiment is bullish on NZD/USD towards this release.

Technical levels, from top to bottom: 0.90, 0.8745, 0.87, 0.8640, 0.86 and 0.8550.

5 Scenarios

1. Within expectations: 0.9% to 1.5%. In such a scenario, NZD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 1.6% to 2.0%: An unexpected higher reading can push the pair above one resistance line.
3. Well above expectations: Above 2.0%: A surge in the reading would likely bolster the kiwi, and the pair could break a second line of resistance as a result.
4. Below expectations: 0.4% to 0.8%: A weak GDP figure could push NZD/USD below one support level.
5. Well below expectations: Below 0.4%. A very poor reading would likely hurt the kiwi, and the pair could push below a second level of support.

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

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