Forex Signal (Wed July 13 2011, 6:45pm NY Time EST) – NZ GDP q/q

We’ll be getting the quarterly release of New Zealand’s GDP, and because it is a quarterly release, market tends to pay more attention to it, thus more volatility is expected. Here’s forecast:

6:45pm NZ GDP q/q Forecast 0.3% Previous 0.2%
Action: NZD/USD BUY 0.6% SELL 0.0%

The Trade Plan
The expected consensus number is 0.3%, and the safe deviation is 0.3%, in the event it is hit, we should see market move 40 pips within the hour.

We’ll be looking to BUY the NZDUSD if the release is at 0.6% or better, or we’ll SELL NZDUSD is the release is 0.0% or worse. We’ll be using our standard after-news retracement trading method.

For more information on the Retracement Method, please read:
Henry Liu’s News Trading Method.

The Market
NZD has been benefitting from the risk appetite sentiment of late and has reached 26 year highs against USD and GBP on sentiment alone. If this release were to show strong reading for Q1 of 2011, we will see speculation for RBNZ to resume rate hikes at record high, thus pushing NZD to an even stronger level…

However, if the release is flat or negative, then market may pare off some recent gains, but I would still look to BUY NZD at the lows as the long-term trend still remains bullish for NZD.

Additional Thoughts
NZDUSD is a slow yet steady currency pair. If we do get our deviation, we should get in the market as soon as possible…

Pre-news Trading
Since market is likely to be driven by risk sentiment, it’s probably best to stay out of the market.

Definition
“Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation’s currency. GDP is the broadest measure of activity and the primary gauge of the economy’s health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation’s currency.”

Historical Data & Chart For NZ GDP q/q

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