A weak fight back in the USD knocked the NZD/USD off yesterday’s 0.8430 post GDP/FOMC highs. However, at 0.8370, it remains almost 2½ cents above where it started the week. Further near-term gains look likely. The New Zealand economy grew 0.2% in the second quarter of 2013. This may have been the weakest quarter of growth since the -0.4% of Q4, 2010 but it was still a remarkable number when you consider NZ was in the midst of one of its worst droughts on record. One might suggest that the economy has narrowly avoided capsizing at a critical moment.
The data further emboldened the NZD yesterday, having earlier topped up on Fed Chairman Bernanke’s policy drugs. NZD/USD hit a 4-month high of 0.8435 and NZD/AUD flew back above 0.8800. The daily close above the key 0.8820 resistance level on the cross means an assault on the August 0.8930 highs looks increasingly likely. Our Q4 forecast remains 0.9000.
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