NZD/USD rises slightly toward 0.5900 after Q2 inflation expectations report from the RBNZ.

• NZD/USD is expected to strengthen as inflation expectations from the Reserve Bank of New Zealand (RBNZ) rose to 2.29% in the second quarter, up from 2.06% previously.
• The New Zealand Dollar, sensitive to risk, has gained traction due to easing global trade tensions after a preliminary agreement was reached between the US and China.
• Recent economic data from the US is mixed, resulting in the dollar remaining within a narrow trading range.

The NZD/USD pair is set to end its two-day upward trend and hover around 0.5890 during Asian trading on Friday. This movement follows the latest RBNZ inflation expectations report for 2025.

The latest forecast has increased to 2.29% from the earlier 2.06%, indicating business leaders’ expectations for annual CPI two years ahead. Additionally, the Business NZ PMI for April rose to 53.9, compared to a previous reading of 53.2.

The New Zealand Dollar is benefiting from reduced global trade tensions, as a preliminary agreement between the US and China is in play. The US plans to cut tariffs on Chinese goods from 145% to 30%, while China intends to decrease tariffs on US imports from 125% to 10%. Market confidence is also getting a boost from new hopes around potential US nuclear deals.

On the other hand, US economic data shows both resilience and some waning momentum. This mixed picture is contributing to the dollar’s limited movement within a narrow range.

In April, the US Producer Price Index (PPI) showed a year-on-year increase of 2.4%, down from 2.7% in March and also lower than the anticipated 2.5%. The core PPI, excluding food and energy, rose by 3.1% annually. On a monthly basis, headline PPI dropped by 0.5%, while core PPI decreased by 0.4%. For the week ending May 10th, the initial unemployment claims stabilized at 229,000, aligning with revised figures from the prior week and market predictions.