Home Forex News NZD/USD Bearishness Persists As NZ GDP Collapses 1.6%

NZD/USD Bearishness Persists As NZ GDP Collapses 1.6%

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  • NZ GDP Weakness
  • NZ Growing Unemployment
  • U.S Jobless Claims

NZD/USD pair slid Thursday morning as weak NZ GDP data rattled traders, fuelling weakness in the NZ dollar. With the New Zeeland economy experiencing its biggest contraction in 29 years, the pair struggles to find support above two-month highs.

NZ dollar Weakness

The pair has been on a decline in recent weeks at the back of a resurgent dollar amid risk aversion sentiments. The dollar continues to strengthen across the board as traders continue to scamper for safety in safe havens, amidst the threat of a second wave of coronavirus infections.

While New Zealand is accredited for its handling of the coronavirus pandemic, the economic situation has continued to worsen in recent weeks. A plethora of weak economic data has all but painted a clear picture of the NZ economy’s health, despite the country being the first to declare itself free of the virus.

Economic Recovery Warning

The country’s growth plummeted by 1.6% in the first quarter as the economy continued to reel from the effects of lockdowns imposed in March. Even on the opening of the economy, many businesses, especially in the travel and hospitality industry, are yet to bounce back leading to the economic contraction

The New Zeeland Fiancé Minister Grant Robertson warned that the coronavirus’s biggest impact would be felt in the second half of the year all but continue to fuel weakness in the NZ dollar. The Greenback, on the other hand, continues to strengthen as a safe-haven as the threat of a second wave of coronavirus continues to send shockwaves in the market.

While the dollar is at three-month lows, the release of Philadelphia FED Manufacturing Index on Thursday should sway traders’ sentiments conversely influence its standing against the NZ dollar. Similarly, traders await the release of the U.S jobless claims expected to paint a picture of the U.S economy, which should also sway greenback sentiments as well as NZD/USD price action.

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