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NZ Dollar rallies after surprise GDP figure

21/03/2019

The New Zealand Dollar (Kiwi or NZDUSD), initially under pressure from a surprisingly accommodative US Federal Reserve statement yesterday, was itself the beneficiary of unexpectedly positive GDP figures of 0.6% in Q4 2018 after posting +0.3% in Q3. This came as something of a surprise to the markets who were undoubtedly positioned incorrectly, and thus caught in a panic rally of 70 points to 0.6925. We wouldn’t expect to see much in the way of continuation here just yet, since the rally was amplified by the fact that people were positioned wrongly ahead of the announcement.  The market was simply caught the wrong way and at $100/point that can get quite expensive, quite quickly. On balance we think that the market will settle down at a slightly lower level, and then that traders will take a step back to reassess what has been a difficult day for many of them. On balance, we believe that the New York market will set the tone over the next 24 hours, and that they’ll probably just see this as a better point at which to sell.

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