NZD/USD is trading around 0.71, higher after New Zealand's outstanding growth data. The kiwi may surge above the 0.73 level as markets are pricing a 50% chance of a 50bp move by the Reserve Bank of New Zealand (RBNZ), economists at Westpac report.
NZ GDP in June was at a much higher level than previously thought
“NZD/USD may have completed its two-week old correction at 0.7075. If so, we will watch for a range break above 0.7170, which would signal a move beyond 0.7300.”
“The rise in NZ-US yield spreads should persist for some time, since the RBNZ’s hiking cycle will likely start in October and continue until 2024. Markets have priced a 100% chance of a 25bp hike in October, and a 50% chance of a 50bp move then.”
“The 2.8% QoQ gain was well above consensus at 1.1% and the RBNZ’s forecast of 0.7%. The end result of all of this is that the level of GDP as at the end of June is much higher than was previously thought, with obvious implications for capacity pressures and therefore monetary policy.”