• NZD/USD slipped sharply lower on Thursday after weaker-than-expected New Zealand GDP data fueled bets on interest rate cuts.
• New Zealand’s economy contracted more than expected in Q2, dragged by a continued slump in construction and global uncertainty, boosting bets on a sharper rate cut in October.
• Data on Thursday showed GDP dropped 0.9% in Q2, sharper than the 0.3% decline forecast by both analysts and the RBNZ.
• Statistics New Zealand reported annual GDP fell 0.6%, against expectations for no change. Markets now expect 58 bps of OCR cuts, up from 48 bps before the GDP release, and see a 20% chance of a 50 bps cut in October.
• Immediate resistance is located at 0.5969(Daily high), any close above will push the pair towards 0.6000 (Psychological level).
• Support is seen at 0.5899(50%fib)and break below could take the pair towards 0.5832(Sep 4th low).
Recommendation: Good to sell around 0.5910 with stop loss of 0.6000 and target price of 0.5850
