- The New Zealand Dollar (NZD) extends upside in Wednesday’s early Asian session.
- Improved risk sentiment and softer US Dollar support the NZD/USD pair.
- Market participants await the RBNZ interest rate decision, with no change in rate expected.
The New Zealand Dollar (NZD) extends the rally on the weaker Greenback on Wednesday. Further optimism in the risk sentiment has maintained the US Dollar (USD) under pressure in the previous sessions and created a tailwind for the pair. The signs of stronger demand from China also underpin the Kiwi as China is New Zealand’s largest trading partner.
Nonetheless, escalating geopolitical tensions in the Middle East might limit the upside for the NZD. All eyes will be on the Reserve Bank of New Zealand (RBNZ) interest rate decision on Wednesday at 02:00 GMT. The New Zealand central bank will likely hold its Official Cash Rate (OCR) at 5.50% at its August meeting. The policy decision appears to be a “close call” between a hold and a cut, as inflation expectations fall. Traders will take more cues from the Press conference, and dovish comments from RBNZ Governor Adrian Orr could weigh on the Kiwi. Later in the day, the US July Consumer Price Index (CPI) will be in the spotlight.
Daily Digest Market Movers: New Zealand Dollar strengthens ahead of RBNZ rate decision
- Swap markets imply a nearly 70% chance of the RBNZ lowering the cash rate by 25 basis points (bps) to 5.25%. Markets are pricing in 90 bps of easing this year and another 148 basis points in 2025.
- The US Producer Price Index (PPI) for final demand in the US rose 2.2% YoY in July from 2.7% in June, the Bureau of Labor Statistics showed Tuesday. This figure was below the market expectation of 2.3%. On a monthly basis, the PPI increased 0.1% MoM in the same period after rising by an unrevised 0.2% in June.
- The annual core PPI came in softer than expected, rising by 2.4% in July but falling short of an estimate of 2.7%. On a monthly basis, the core PPI remained unchanged.
- Investors expect a 25 basis point (bps) rate cut in September, followed by similar reductions in November and December. A 50 bps cut in September is possible but depends entirely on the data.
- Atlanta Fed President Raphael Bostic said on Tuesday that recent economic data made him “more confident” that the Fed can get inflation back to its 2% target. Still, more evidence is needed before he’s ready to support lowering interest rates, per Reuters.
Technical Analysis: New Zealand Dollar resumes bullish bias
The New Zealand Dollar trades on a firmer note on the day. However, the NZD/USD pair has resumed its uptrend since the price crossed above the key 100-day Exponential Moving Average (EMA) and broke above the descending trendline on the daily chart. The 14-day Relative Strength Index (RSI) is above the midline near 61.00, suggesting that upside momentum is present and the support level is likely to hold rather than break.
The immediate resistance level for NZD/USD emerges at the 0.6090-0.6100 region, portraying the upper boundary of the Bollinger Band and psychological mark. A decisive break above this level could potentially take the price to 0.6154, a high of July 8.
On the other hand, the resistance-turned-support level at 0.6050 acts as an initial support level for the pair. Any follow-through selling below the mentioned level would expose 0.5977, a low of August 8.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Pound Sterling.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.02% | 0.00% | 0.01% | 0.00% | -0.04% | 0.00% | 0.02% | |
| EUR | -0.01% | -0.01% | 0.01% | 0.00% | 0.03% | -0.01% | 0.00% | |
| GBP | 0.00% | 0.02% | 0.00% | 0.02% | 0.05% | 0.01% | 0.01% | |
| CAD | -0.01% | 0.00% | -0.01% | 0.02% | 0.00% | -0.02% | 0.00% | |
| AUD | 0.00% | 0.00% | 0.01% | 0.00% | 0.05% | -0.01% | -0.02% | |
| JPY | -0.05% | 0.00% | -0.03% | -0.04% | -0.03% | 0.00% | -0.01% | |
| NZD | -0.03% | 0.00% | 0.02% | -0.05% | -0.01% | 0.00% | -0.03% | |
| CHF | -0.01% | 0.01% | 0.00% | 0.01% | 0.00% | 0.00% | 0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
