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NZD: NZD/USD Steadies Post Fed & GDP Sell-off

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  • NZD/USD traded 0.12% higher to 0.5631 on Thursday, with the pair trading in a narrow range after a gap down following the Fed decision and NZ GDP data. The pair has now dropped 11.31% since the start of October and is the worst performing G10 currency.
  • New Zealand's economy entered a recession with a sharper-than-expected 1% GDP contraction in Q3 2024, following a 1.1% decline in Q2. While historical revisions show the downturn is from a higher growth base, the economy remains aligned with earlier expectations. The outlook suggests a modest recovery starting in Q4 2024. Policymakers are urged to lower rates below neutral to support growth.
  • New Zealand's consumer confidence rose to 100.2 in December, marking the first optimistic reading since September 2021. Two-year inflation expectations fell to 3.8%, and fewer consumers view it as a bad time to make major purchases. While still cautious, sentiment has significantly improved, supported by lower interest rates beginning to take effect.
  • The pair has smashed through initial support on Thursday, with eyes now on 0.5600, a break here could open a move to test the 2022 lows at 0.5500. We trade well below all moving averages, while the RSI is now nearing it's most oversold for the year, at 26. Initial resistance is at 0.5793 (Dec 18th highs), the 20-day EMA is currently 0.5800.
  • The NZ-US 2yr swap has held steady post the Fed and GDP on Thursday we last trade -77bps, the lowest since Nov 2018.
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  • NZD/USD traded 0.12% higher to 0.5631 on Thursday, with the pair trading in a narrow range after a gap down following the Fed decision and NZ GDP data. The pair has now dropped 11.31% since the start of October and is the worst performing G10 currency.
  • New Zealand's economy entered a recession with a sharper-than-expected 1% GDP contraction in Q3 2024, following a 1.1% decline in Q2. While historical revisions show the downturn is from a higher growth base, the economy remains aligned with earlier expectations. The outlook suggests a modest recovery starting in Q4 2024. Policymakers are urged to lower rates below neutral to support growth.
  • New Zealand's consumer confidence rose to 100.2 in December, marking the first optimistic reading since September 2021. Two-year inflation expectations fell to 3.8%, and fewer consumers view it as a bad time to make major purchases. While still cautious, sentiment has significantly improved, supported by lower interest rates beginning to take effect.
  • The pair has smashed through initial support on Thursday, with eyes now on 0.5600, a break here could open a move to test the 2022 lows at 0.5500. We trade well below all moving averages, while the RSI is now nearing it's most oversold for the year, at 26. Initial resistance is at 0.5793 (Dec 18th highs), the 20-day EMA is currently 0.5800.
  • The NZ-US 2yr swap has held steady post the Fed and GDP on Thursday we last trade -77bps, the lowest since Nov 2018.