New Zealand Dollar drops sharply today after big miss in GDP data. GDP grew 0.3% qoq in Q3, sharp slow down from Q2’s 1.0% qoq and missed expectation of 0.6% qoq. Deep contraction is seen in both construction and manufacturing. Construction fell -0.8%, driven by a decrease in heavy and civil construction. Manufacturing dropped -0.8% “with 6 of 9 manufacturing industries declining.” Services growth also eased to 0.5%, slowest rate of growth in six years. Also from New Zealand, trade deficit shrank to NZD -861M in November.
NZD/USD’s recovery this week proved to be rather short-lived. Fall from 0.6969 resumed and reached as low as 0.6736 so far. Such decline is expected to extend to 61.8% retracement of 0.6424 to 0.6969 at 0.6632. For now, we’d expect strong support from there to bring rebound. Price actions from 0.6424 medium term bottom would develop into a consolidative pattern that lasts for a while.
