The New Zealand dollar rose today after data from the statistics office showed that the GDP expanded at a faster rate than traders had expected. In the second quarter, the economy expanded at an annualized rate of 2.8%, which was faster than the 2.5% the traders were expecting. This was also higher than the average GDP growth of 2.7%. It was also the highest growth rate in 2 years. On a QoQ basis, the economy expanded by 1.0%, which was higher than the expected 0.8%.
The kiwi’s rise was mostly because of the previous statement by the RBNZ. In last month’s meeting, the officials said that there were chances that they would be forced to cut rates. At the time, major economic data was disappointing. In fact, 40% of the traders were anticipating a rate cut by 2019.
According to the statistics office, the growth in the economy was broad-based with 15 out of the 16 sectors increasing. Services industry was the biggest contributor to the gains followed by agriculture, which rose by the highest margin since 2014.
In recent years, New Zealand has emerged as a leading destination of wealthy Europeans, Asians and Americans. These people believe that the country’s strategic location and its relations with the world makes it an ideal location in case of a major global conflict. This has seen the housing prices rise at the fastest level in decades, leading to the decision by the government to halt international purchases of real estate.
In recent weeks, the weaker US dollar has led to an increase in the value of the kiwi. It has risen from the YTD low of 0.6500. After the GDP numbers, the pair reached a high of 0.6650. This was at the upper band of the Bollinger Bands. The pair appears to be forming a cup and handle pattern. This means that if it happens, the pair may continue moving upwards until it reaches the resistance level of 0.6800.