- NZD/USD awaits the Chinese GDP data for a potential catalyst.
- NZD to fund support on stronger global growth going forward.
- RBNZ 14th Feb meeting next major risk for the bird.
NZD/USD is currently trading at 0.6634 within a tight ten-pip range as markets await the Chinese Gross Domestic Produce at the top of the hour. The bird was steady in the US session with a net gain of 0.3%, although the US dollar was stealing the show across the board, supported on positive outcomes in US data, bucking the recent negative trend since last week’s Nonfarm Payrolls disappointment.
US growth is still the global outperformer and that can lend the USD strength short term. From a New Zealand perspective, the NZD may consolidate ahead of next week’s CPI data. Retail Sales rose 0.3% MoM (control group rose 0.5%, est. 0.4%). this was in line with estimates but nevertheless encouraging. The US Jan Philly Fed index at 17.0 also encouraged a bid in the US dollar, beating expectations (est. 3.7, prior 2.4) to retest mid-2019 highs. The data and showed solid gains in employment and new orders components.
“There is no evidence of a US recession and low inflation and zero to negative real short-term interest rates are providing additional stimulus. Last year’s Fed policy easing will support growth over the next 12 months. Against the backdrop of more settled US-China trade relations, that is good news for global growth. And it’s not just the Fed,” analysts at ANZ Bank explained – a potential propr for the antipodeans, trading a proxy.
Chinese GDP on the cards
Looking ahead for today, we have China’s Gross Domestic Product for Q4 whereby annual growth is expected to print at 6.0%YoY, in line with the Q3 result.
“This will leave year-average growth at the low-end of authorities’ 6.0-6.5% target for 2019. “The detail on investment and consumption will be key and monthly data for December will provide additional context. Of the December data, we will be most interested in industrial production, with consensus 5.9%yr vs 6.2%yr in November,”
analysts at Westpac explained.
Looking ahead, there will be a focus on the Reserve Bank of New Zealand and data leading up to the meeting – 12th February 2020.
“We expect headline CPI rose 0.5% QoQ in the December quarter, with annual inflation accelerating to 1.9% from 1.5% in Q3. Non-tradable inflation is expected to print at 0.7% QoQ (3.2% YoY), with tradable inflation up 0.2% QoQ (-0.1% YoY),” analysts at ANZ Bank look for:
“This is stronger than the RBNZ’s November MPS forecast, owing mostly to stronger-than-expected tradable inflation. This is the less persistent type of inflation, but nonetheless it sees annual inflation come within a whisker of the target midpoint, and thus affords the Reserve Bank some scope to sit back and see how things evolve from here.”