THE TAKEAWAY: New Zealand GDP grows 1.1% first quarter, +2.4% over 12 months > Steady growth since January 2010 > NZD rallies
New Zealand Dollar rallied as gross domestic product grew by 1.1 percent, beating expectations in the first three months of the year by 0.7 percent. The economy also grew over the last twelve months by 2.4 percent which was 1.1 percent better than consensus. A burgeoning 2.4 percent rate marks the greatest acceleration in production since March 2008 and extends the upward growth trend beginning December 2010.
Consecutive periods of GDP growth may prompt policy officials to consider increasing interest rates in an attempt to stymie rising prices. Consequently, heightened interest rate expectations may become a bullish cue for markets to bid up the home currency because holding higher yielding pairs can create profit-generating potential.
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