NZD/USD: Trading the New Zealand GDP March 2013

New Zealand Gross Domestic Product (GDP) is a key economic indicator, released each quarter. GDP measures production and growth of the economy, and 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 21:45 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 treat the GDP release as a market-mover, as any unexpected reading could affect the direction of NZD/USD.

GDP in Q4 of 2012 rose just 0.2%, missing the estimate of 0.4%. The forecast for Q1 stands at 0.9%, which would be a excellent result. Will the indicator meet or beat this rosy estimate?

Sentiments and levels

The kiwi has been on a downward trend, losing over  two cents against the US dollar since mid-February. However, there have been some bright signs in the New Zealand economy. The Manufacturing Index rose in March, and the Current Deficit is expected to drop in the upcoming release. A lot will depend on the GDP release later in the week. So, the overall sentiment is neutral on NZD/USD towards this release.

Technical levels, from top to bottom: 88.42, 84.70, 83.60, 81.75, 81 and 79.75.

5 Scenarios

1. Within expectations: 0.7% to 1.1%. In such a scenario, NZD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 1.2% to 1.5%: An unexpected higher reading can push the pair above one resistance line.
3. Well above expectations: Above 1.5%: An 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: 0.3% to 0.6%: A weak GDP figure could push NZD/USD below one support level.
5. Well below expectations: Below 0.3%. A very poor reading could push the pair below a second level of support.

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

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