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Forex - NZD/USD surges following GDP report

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Investing.com - The New Zealand dollar is soaring against its U.S. rival during Thursday's session following a strong-than-expected fourth-quarter GDP report out of New Zealand.

In Asian trading Thursday, NZD/USD is higher by 0.38% at 0.8254. The pair was likely to find support at 0.8235, the low of March 14 and resistance at 0.8270, Tuesday's high.

Earlier today, Statistics New Zealand said that New Zealand's GDP jumped 1.5% in the fourth quarter, easily topping analysts' expectations of growth of 1.2%. The country's economic output rose 0.2% in the third quarter.

That is the biggest GDP growth increase for New Zealand in three years and the fourth-quarter report was nearly twice that of the 0.8% growth rate previously forecast by the Reserve Bank of New Zealand.

Speaking of RBNZ, the central bank recently signaled a slightly dovish tone regarding interest rates, but the GDP report serves as a signal that New Zealand's economy is on sound footing and that rate cuts may not be necessary.

RBNZ is expected to leave rates unchanged until early next year with most traders expecting an increase after that. New Zealand's benchmark interest rate currently resides at 2.5%, low by the country's standards, but high compared to much of the developed world.

More important than interest rates may be the strength of the kiwi. The strong kiwi benefits New Zealand's importers, but is hampering export industries. New Zealand's dollar has risen about 12% in the spot market over the past two years.

Traders will now turn their attention to the flash reading of China's Purchasing Managers Index due out later today. China is New Zealand's biggest trading partner.

Elsewhere, NZD/JPY rose 0.25% to 79.15 EUR/NZD slid 0.42% to 1.5670. AUD/NZD lost 0.46% to 1.2565.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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