NZD/USD remains bearish around 0.6150 as Credit Suisse and SVB's problems are joined by NZ GDP 's negative performance

 NZD/USD remains bearish around 0.6150 as Credit Suisse and SVB's problems are joined by NZ GDP 's negative performance

NZD/USD is struggling to overcome its intraday losses despite the recent rally in the Kiwi.
New Zealand's fourth quarter GDP came in weaker than expected, raising fears of a downgrade of New Zealand's credit rating.
Troubles at major banks in the U.S. and Europe foreshadow a return of the 2008 financial crisis, weighing on riskier assets such as antipode paper.
Goldman Sachs' economic outlook and China's threat to European equities entertain traders in a sluggish session.
NZD/USD remains depressed near 0.6160, down for the second day in a row, though it recouped its intraday losses at the start of Thursday's European session.

The kiwi pair is bearing the brunt of New Zealand's weak fourth-quarter gross domestic product (GDP) results, as well as market fears stemming from recent bank failures in the U.S. and Europe. It's worth noting that headlines pointing to improving economic conditions in China, one of New Zealand's most important customers, have tested the bears in recent hours along with sluggish yields.

Earlier in the day, New Zealand's Q4 GDP fell to -0.6% compared to market forecasts of -0.2% and previous readings of 2.0%. YoY numbers also fell to 2.2%, down from the expected 3.3% and 6.4% in the previous readings. The figures are all the more worrying as Bloomberg on Wednesday quoted Anthony Walker, director of sovereign ratings for Australia, New Zealand and the Pacific at S&P, as saying that "New Zealand's credit rating could come under pressure at S&P Global Ratings if the country's current account deficit remains too large" It should be noted that the national current account deficit shrank to $9.45 billion in the fourth quarter from $10.2 billion in the third quarter. However, the current account-to-GDP ratio fell to -8.9% from -7.9% in the previous quarter and -8.4% in market forecasts.

Elsewhere, recent fears emanating from Europe's G- SIB - a global systemically important bank, namely Credit Suisse, are reviving fears of the 2008 financial crisis as they follow the fallout from U.S. banks, namely Silicon Valley Bank (SVB) and Signature Bank. Another reason for the fears are headlines from Bloomberg that the China Securities Regulatory Commission is delaying approval of new applications to sell global depository receipts, according to people familiar with the situation, which could choke off a lucrative stream of IPOs in Europe.

On the positive side, news that Credit Suisse was looking to borrow up to CHF50 billion from the Swiss National Bank (SNB) to boost liquidity attracted a lot of attention and gave NZD/USD bears a breather. In the same vein, news that anonymous sources suggested that US banks were less at risk from the Credit Suisse debacle. Moreover, the Bank of England's (BoE) emergency talks and market chatter suggesting that the Federal Reserve (Fed) and ECB didn't show any immediate negative reaction during their monetary policy meetings seem to tame the previous risk aversion. Recently, Goldman Sachs released its upwardly revised economic forecasts for China and attempted to provide a floor for NZD/USD rates.

Against this backdrop, S&P 500 futures are up 0.40% on the day, recouping the previous day's losses at 3,940, while 10-year U.S. Treasury yields are stabilizing at 3.48% after falling the most in four months on Wednesday. But two-year government bond coupons are also halting the further downward trend at 3.94% after falling to the lowest level since September 2022.

Looking ahead, risk catalysts and second-tier U.S. employment, manufacturing and housing data may entertain NZD/USD traders. However, the main focus will be on bond market movements and headlines surrounding Credit Suisse, Silicon Valley Bank (SVB) and Signature Bank.