NZD/USD kept gains after NZ GDP report, Fed decision

New Zealand dollar was maintaining gains against its US peer on Thursday, following the release of better than forecast Gross Domestic Product data out of New Zealand.

NZD/USD reached a session high at 0.8410 at 1:50 GMT, after which consolidation followed at 0.8401, gaining 0.35% for the day. Support was likely to be received at May 13th low, 0.8318, while resistance was to be encountered in the area 0.8425-0.8445.

The kiwi rose sharply against the greenback, after earlier today it became clear that New Zealands Gross Domestic Product grew 2.5% during the second quarter of the year on annual basis, exceeding expectations of a 2.3% gain, while the GDP figure during the first quarter has been revised up to a 2.7% advance from a 2.4% gain previously. On quarterly basis, the GDP rose by 0.2% in Q2 in line with preliminary estimates, while in Q1 2013 compared to Q4 2012 New Zealands economy expanded by 0.4%. Higher activity in the sector of construction managed to make up for the drop, caused by the longest drought in the country for the past 30 years.

This data came one day after it was reported that the deficit figure on New Zealands current account reached 1.252 billion NZD in Q2, while experts had anticipated a greater deficit, at the amount of 1.870 billion NZD. The deficit during the first three months of the year was 0.416 billion NZD.

“The cumulative effect of the drought has been significant,” Statistics New Zealand stated in its report. “Because of the strong increase in slaughter numbers, especially for dairy cows, it may take longer to recover from than previous droughts.”

Meanwhile, yesterday the Federal Reserve Bank left the 85-billion-USD monthly bond purchases intact, while experts surveyed by Bloomberg News had anticipated that the bank would wind down its Quantitative Easing by 5 billion USD. Fed Chairman Ben Bernanke said that conditions in the US labor market were still far from policymakers objectives.

“The kiwi currency obviously got a huge boost from the decision by the U.S. Federal Reserve,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Singapore, cited by Bloomberg. The GDP report “was seen as a positive by the market and that provided another boost.”

Elsewhere, the kiwi was higher against the Australian dollar, with AUD/NZD cross losing 0.54% on a daily basis to trade at 1.1318 at 6:39 GMT.