NZ Dollar Gains Despite Unexpected Contraction of GDP

The New Zealand dollar rose intraday despite an unexpected decline in the country’s economy. By the time of writing, though, the currency trimmed its gains, losing them outright against some of the rivals.
Statistics New Zealand reported that the gross domestic product contracted by 1.0% in the December quarter of 2020 from the previous three months. That was a total surprise to economists who were expecting an increase of 0.2%. Year-on-year, GDP shrank by 2.9%. According to the report, 7 of 16 industries declined last quarter. Goods-producing industries dropped by 3.2%, while primary industries declined by 0.6%. Service industries rose but just barely, by 0.1%. National accounts senior manager Paul Pascoe commented on the results:

Activity in the December quarter shows a mixed picture – some industries are down, but others have held up or risen, despite the ongoing impact of COVID.

Markets were in a mild risk-on mode today following yesterday’s monetary policy announcement from the Federal Open Market Committee. The FOMC upgraded its economic projections, painting a much better picture of the US economy post-COVID than was previously expected. At the same time, Federal Reserve Chairman Jerome Powell signaled that the Fed does not even consider stimulus tapering at present. That hurt the US dollar, though it looks like the greenback is currently attempting to rebound.
With no macroeconomic releases in New Zealand scheduled for tomorrow, the kiwi will be reacting to the outside factors and the general market sentiment.
NZD/USD was up from 0.7230 to 0.7269 intraday but backed off to the opening level by 11:10 GMT today. EUR/NZD fell from 1.6567 to 1.6522, reaching the low of 1.6486 during the trading session. GBP/NZD opened at 1.9302, fell to the daily low of 1.9241 but rebounded to 1.9334 later.
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Original from: www.earnforex.com