• NZD/USD extended declined on Friday as surprisingly steep contraction in New Zealand’s economy lent support to more rate cuts by RBNZ.
• Data on Thursday showed, New Zealand’s economy shrank more than expected in Q2, weighed down by a prolonged slump in construction and global uncertainty, strengthening expectations for a sharper rate cut in October.
• New Zealand’s GDP contracted 0.9% in Q2, a steeper drop than the 0.3% decline projected by both analysts and the RBNZ.
• Markets are fully pricing in a quarter-point cut in October, while assigning roughly a one-in-four chance of a 50-basis-point move.
• Immediate resistance is located at 0.5900(50%fib), any close above will push the pair towards 0.5907(SMA20).
• Support is seen at 0.5834(Sep 4th low)and break below could take the pair towards 0.5801(61.8%fib).
Recommendation: Good to sell around 0.5870 with stop loss of 0.5950 and target price of 0.5800
