As New Zealand’s 2Q GDP beat earlier forecast of 0.8% and rose by 1%, Long NZD/USD?
- In the second quarter, New Zealand economic growth was broad-based with 15 of 16 industries recording higher production.
- Economic growth accelerated to 2.8% from 2.6% on y/y basis.
- New Zealand’s overnight Interest rate swaps previously pricing for a rate cut by mid-2019 fell from 10bps to 5bps yesterday. Moreover, investors have reduced bets on a rate decrease after today’s GDP report. Market has priced in a 22% chance of a single rate cut by June, down from 36 % yesterday.
- On the other hand, China is planning to cut the average tariff rates on imports from the majority of its trading partners as soon as next month, according to a Bloomberg report
- Import tax cut to China can be seen as good news to countries who largely rely on China’s growth, such as Australia and New Zealand
Fullerton Markets Research Team
Your Committed Trading Partner