New Zealand’s second-quarter GDP dropped 0.9%, signalling a slowdown that outpaced market expectations. Annual growth also fell 0.6%, intensifying pressure on the New Zealand dollar.
Experts say the results support expectations for additional cash rate cuts from the Reserve Bank of New Zealand. Traders are eyeing upcoming US economic indicators for clues on the currency’s near-term direction.
Market Reaction: Kiwi Under Pressure
The weak data triggered immediate selling in the New Zealand dollar, with the NZD/USD slipping towards 0.5935. Analysts said the softer growth outlook is likely to weigh on the currency further.
Traders are now turning their attention to US data due later on Thursday, including weekly jobless claims, the Philly Fed Manufacturing Index, and the CB Leading Index, which could add fresh direction to the pair.
Implications for the Reserve Bank of New Zealand
New Zealand’s second-quarter GDP shortfall is raising expectations for further monetary easing from the Reserve Bank of New Zealand. The report noted the result “could reinforce the Reserve Bank of New Zealand’s (RBNZ) stance that it needs to cut the cash rate by 25 basis points (bps) twice more this year.”
Analysts say the data strengthens the case for a looser policy path. Early Asian trading saw the Kiwi weaken against major currencies.