NZ GDP q/q (Gross Domestic Product) 09/22/09

6:45pm (NY Time) NZ GDP q/q   Forecast -0.2%  Previous -1.0%
ACTION: NZD/USD         BUY 0.1%            SELL -0.5%

GDP is a high impact news… The expected consensus number is -0.2%, therefore if we get a 0.3% of deviation, we should see market move 40 pips within the hour.  NZD has been benefitting from the recent risk appetite sentiment and it is currently over at the 0.7170 level.  Should we get a positive reading on the GDP number, expect NZD/USD to rise above the 0.7200 level; should the GDP remain heavily to the downside, a decent retracement should be expected of NZD as at the current level even Governor of RBNZ Bollard feels overvalued… (During his last press conference, Bollard sees NZD/USD at the 0.6200 level, which is almost 1000 pips  less from where we are!!!) 

Click here to watch the video

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.”

UPDATE: GDP came out at a positive number, which gave us a trigger for a BUY on NZD/USD.  However, with the spread and lack of proper retracement on the pair, I was reluctant to get in and get caught buying on the top… as I watch NZD/USD move 120 pips upwards after the news while kicking myself every 10 pips for not getting in, I finally decided to take a contrarian trade at the psychological 0.7300 level and picked up an easy 20 pips on the reversal.  I adviced the room to get out at the 0.7260 area, where most made close to 40 pips…  All in all, it was a great trade and a great day trading news…

I think the best part about this video is not the 20 pips, but how we (me and my trade room members) were able to read the market on a fake exaggerated breakout before the inevitable retracement… you really have to be there to understand… Fortunately, I can teach you to see it.  Stay tuned.