New Zealand to See GDP Data Next Week

The New Zealand dollar was rather strong this week, but those gains could prove short-lived next week as an upcoming GDP report is anticipated to show that the New Zealand economy contracted for the fifth straight quarter during Q1 at a rate of -0.7 percent, which could push the year-over-year rate down to match the Q4 1991 low of -2.3 percent. Indeed, the New Zealand economy has been hit hard as demand for exports has fallen, unemployment has climbed, and consumer spending has faltered. As it stand, Credit Suisse overnight index swaps are pricing in a 26 percent chance of a 25bp cut by the Reserve Bank of New Zealand (RBNZ) on July 29, but if New Zealand GDP falls more than expected, speculation of such a move could rise and weigh on the New Zealand dollar.