NZD/USD faces selling pressure below 0.5650 as New Zealand's GDP falls 1.0% in Q3

• NZD/USD tumbles to near 0.5630 in Thursday's early Asian session, down 0.43% on the day. 
• Weaker-than-expected New Zealand's GDP data weighs on the Kiwi. 
• The Fed announced a quarter-point cut to its key interest rate at its December meeting on Wednesday.

The NZD/USD pair attracts some sellers to around 0.5630 during the early Asian session on Thursday. The weaker-than-expected New Zealand's Gross Domestic Product (GDP) data and hawkish rate cut by the US Federal Reserve (Fed) exert some selling pressure on the pair. 

The downbeat GDP data puts New Zealand into the deepest recession since the initial Covid-related slump in 2020. Data released by Statistics New Zealand on Thursday showed that the country's GDP shrank by 1.0% QoQ in the third quarter (Q3) compared with a 1.1% contraction (revised from -0.2%) in Q2. This reading was below the market consensus of -0.4%. On an annual basis, Q3 GDP contracted by 1.5% versus -0.5% prior, weaker than the -0.4% expected. In response to the data, the Kiwi falls to the lowest level since October 2022 against the US Dollar (USD). 

"It supports the Reserve Bank getting on with official cash rate cuts and getting the OCR back to a more neutral level more quickly than they were anticipating in the November monetary policy statement," said Harbour Asset Management fixed income and currency strategist Hamish Pepper.

On the other hand, a more hawkish-than-expected message from the Fed provides some support to the Greenback and acts as a headwind for NZD/USD. The US central bank decided to lower its key interest rate by a quarter percentage point on Wednesday, the third consecutive rate reduction. The Fed officials indicated that it probably would only lower twice more in 2025. During the Press Conference, Fed Chair Jerome Powell said, "We can therefore be more cautious as we consider further adjustments to our policy rate."