Home Forex Markets New Zealand Dollar Flies Despite GDP Miss

New Zealand Dollar Flies Despite GDP Miss

by WOOWinvest
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Growth Of Plant-Based Industry Alongside E-Commerce Creates Massive Opportunities

The New Zealand dollar edged higher on Thursday. It traded at 0.6855, up 0.24% on the day. The pair rose 0.99% on Tuesday, buoyed by optimism over developments in China and Ukraine.

New Zealand posted a strong 3.0% quarter-on-quarter growth in the fourth quarter. This was below the consensus estimate of 3.2%, but still marked an impressive turnaround from a -3.6% decline in the third quarter. The data confirmed the rebound in the economy after COVID-19 lockdowns hampered it in the third quarter.

The Chinese government intervened after the country’s stock market crashed. Beijing has announced plans to boost the economy through monetary and lending policies that stimulate growth. The announcement boosted Chinese stocks on Wednesday, surging 9.1%. The news also sent the New Zealand dollar soaring, as China is New Zealand’s largest export market.

There was more positive news for the risk-sensitive New Zealand currency as Ukraine’s peace plan appeared to be making significant progress. We have seen reports of progress in the negotiations, only to be disappointed by the results, and the fighting has not stopped. Still, both Russian and Ukrainian officials are more optimistic about a deal, boosting risk appetite.

Fed hikes rates, revised dot plot

The Fed’s first rate hike since 2018 didn’t surprise anyone. Of more interest to the market, it expects six more rate hikes this year.

Dotplot also forecasts that rates will rise to around 3% by the end of 2023, well above the December estimate of 1.60%. Federal Reserve Chairman Jerome Powell said the shrinking of the balance sheet could begin as early as May. Combined with the imminent rate hike, this suggests the Fed plans to aggressively tighten.

NZD/USD daily chart

NZD/USD technical

NZD/USD found support and resistance at 0.6893 and 0.6974 at 0.6764 and 0.6716

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