- The New Zealand dollar strengthened after the RBNZ cut the official cash rate by 50 basis points in November.
- RBNZ Governor Orr noted that this forecast is consistent with a possible 50 basis point rate cut in February 2025.
- The dollar has struggled due to optimism in bond markets following President-elect Donald Trump's appointment of fund manager Scott Bessent.
The New Zealand dollar (NZD) ended a five-day losing streak against the US dollar (USD) following Wednesday's Reserve Bank of New Zealand (RBNZ) interest rate decision. The central bank announced it would further cut the Official Cash Rate (OCR) by 50 basis points (bps) from 4.75% to 4.25% in November.
The RBNZ justified the cut on the bleak economic outlook and falling inflation, which is now back in the central bank's target range of 1-3%. Earlier this year, the central bank cut the OCR by 25bp in August, followed by a 50bp cut in October.
RBNZ Governor Adrian Orr made prepared comments on the policy statement at a press conference after the meeting. Orr clarified the misconception that the central bank's outlook indicated a slowdown in the pace of rate cuts, saying the outlook was consistent with a potential 50 basis point rate cut in February 2025, depending on economic activity. did. He also expressed confidence that domestic inflationary pressures will continue to ease.
The New Zealand dollar suffered from weak market sentiment, mainly due to President-elect Donald Trump's announcement of a 10% tariff increase on all Chinese goods imported into the United States and 25% tariffs on imports from Mexico and Canada. faced difficulties due to this. . China is an important trading partner for New Zealand, so any economic disruption in China will have a direct impact on New Zealand's economy.
New Zealand dollar gains as bond market optimism challenges US dollar
- The dollar faced pressure amid optimism in bond markets following President-elect Donald Trump's decision to nominate Wall Street veteran and fiscally conservative fund manager Scott Bessent as Treasury secretary.
- However, downside risk to the US dollar remains limited. Preliminary S&P Global US Purchasing Managers' Index (PMI) results have heightened expectations that the US Federal Reserve (Fed) may slow the pace of interest rate cuts. The probability of a quarter-point rate cut has fallen to 57.7%, according to the CME FedWatch tool.
- Minutes of the latest Federal Open Market Committee (FOMC) policy meeting held on November 7 indicate that policymakers are cautious about lowering interest rates due to easing inflation and a strong labor market. Shown.
- Bloomberg reported on Tuesday that President-elect Donald Trump is expected to nominate Jamieson Grier as U.S. trade representative. Mr. Greer's nomination underscores the central role of tariffs in Mr. Trump's economic strategy.
- Chicago Fed President Austan Goolsby indicated Tuesday that the Fed is likely to continue lowering rates toward a neutral stance of neither stimulating nor restricting economic activity. Meanwhile, Minneapolis Fed President Kashkari emphasized that it is still appropriate to consider further rate cuts at the December Fed meeting, according to Bloomberg.
- The S&P Global US Composite PMI rose to 55.3 in November, marking the largest increase in private sector activity since April 2022. Meanwhile, the US services PMI rose from 55.0 to 57.0, significantly exceeding the market expectation of 55.2 and marking the world's fastest expansion. Service sector from March 2022.
- New Zealand's gross domestic product (GDP) fell by 0.2% in the second quarter (Q2), following growth of 0.1% in the previous quarter. Economists had forecast negative growth of 0.4% over the same period, while the RBNZ had predicted a contraction of 0.5%.
- Stats NZ announced on October 16 that New Zealand's annual consumer price index (CPI) rose 2.2% in the third quarter, in line with market expectations and slowing significantly from the 3.3% growth in the second quarter. .
New Zealand dollar tests upper bound of descending channel near 0.5900
The NZD/USD pair is trading around 0.5880 on Wednesday. A daily chart review highlights a deepening bearish trend as the pair moves within a descending channel pattern. Meanwhile, the 14-day Relative Strength Index (RSI) remained below 50, indicating that negative sentiment persists.
As for the support level, the NZD/USD pair is likely to remain around the psychological level 0.5800, which coincides with the lower bound of the descending channel. A decisive break below this level will send the pair towards a two-year low of 0.5772, which was last seen in November 2023.
On the upside, immediate resistance lies at the 14-day exponential moving average (EMA) at 0.5886, which coincides with the upper bound of the descending channel. Further barriers appear at the psychological level 0.5900.
NZD/USD: daily chart
New Zealand dollar price today
The table below shows the percentage change of the New Zealand Dollar (NZD) against major currencies today. The New Zealand dollar was the strongest against the US dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | -0.11% | -0.47% | -0.01% | -0.26% | -0.72% | -0.14% | |
| EUR | 0.02% | -0.10% | -0.45% | 0.00% | -0.24% | -0.69% | -0.12% | |
| GBP | 0.11% | 0.10% | -0.36% | 0.10% | -0.14% | -0.60% | -0.02% | |
| JPY | 0.47% | 0.45% | 0.36% | 0.46% | 0.21% | -0.24% | 0.34% | |
| CAD | 0.01% | -0.01% | -0.10% | -0.46% | -0.25% | -0.71% | -0.13% | |
| australian dollar | 0.26% | 0.24% | 0.14% | -0.21% | 0.25% | -0.45% | 0.12% | |
| new zealand dollar | 0.72% | 0.69% | 0.60% | 0.24% | 0.71% | 0.45% | 0.58% | |
| swiss franc | 0.14% | 0.12% | 0.02% | -0.34% | 0.13% | -0.12% | -0.58% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select the New Zealand dollar from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box represents NZD (base)/USD (estimate).
New Zealand Dollar Frequently Asked Questions
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known trading currency among investors. Its value is broadly determined by the health of New Zealand's economy and the country's central bank policy. Still, there are some unique peculiarities that can move the New Zealand dollar. China is New Zealand's largest trading partner, so developments in the Chinese economy tend to drive Kiwis. Bad news for China's economy would likely mean New Zealand exports to the country would fall, hurting the economy and thus the currency. Another factor driving the New Zealand dollar is dairy prices, as the dairy industry is New Zealand's main export. Rising dairy prices will boost export earnings, contributing positively to the economy and, in turn, to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain inflation between 1% and 3% over the medium term, with a focus on keeping inflation near the midpoint of 2%. There is. For this purpose, banks set appropriate interest rate levels. If inflation is too high, the RBNZ will raise interest rates to cool the economy, a move that would also push up bond yields, making the country more attractive to investors and strengthening the New Zealand dollar. Conversely, when interest rates fall, the NZ dollar tends to fall. The so-called interest rate differential, or how New Zealand interest rates compare or are expected to be compared to the rates set by the US Federal Reserve, is also important to the movement of the NZD/USD pair. may play a role.
The release of macroeconomic data in New Zealand is key to assessing the state of the economy and can impact the valuation of the New Zealand Dollar (NZD). A strong economy with high economic growth, low unemployment and high confidence is good for the New Zealand dollar. High economic growth attracts foreign investment, and if this economic strength is combined with higher inflation, it could prompt the Reserve Bank of New Zealand to raise interest rates. Conversely, if economic indicators are weak, the NZ dollar may depreciate.
The New Zealand dollar (NZD) tends to rise during risk-on periods, or when investors perceive the overall market to be less risky and optimistic about growth. This tends to make the outlook for commodities and so-called “commodity currencies” such as the kiwi more favorable. Conversely, during times of market turmoil or economic uncertainty, the NZ dollar tends to weaken as investors tend to sell riskier assets and seek refuge in more stable safe-haven assets.
