Kiwi dollar holds flat amid US data delays and government shutdown

Daily Currency Update

The New Zealand dollar (NZD) traded largely unchanged against the U.S. dollar (USD) on Thursday, with NZD/USD hovering around 0.5735 during the early European session. Market participants remained cautious amid a combination of delayed U.S. inflation data, ongoing U.S.–China trade negotiations, and uncertainty stemming from the U.S. government shutdown, which has now stretched into its 23rd day. The U.S. dollar has steadied in recent sessions as traders tread carefully ahead of the rescheduled release of the U.S. Consumer Price Index (CPI), a key measure of inflation that could influence expectations for the Federal Reserve’s policy path. Meanwhile, renewed discussions between Washington and Beijing have done little to calm investor nerves. Any signs of rising trade friction between the world’s two largest economies could pressure the Kiwi, often viewed as a proxy for Chinese economic sentiment due to New Zealand’s strong export ties with China, particularly in the dairy and agricultural sectors. The U.S. government shutdown continues to inject additional uncertainty into the economic outlook. Now in its 23rd day, the second-longest in U.S. history, the impasse has left several key federal agencies closed and halted the release of critical economic data from the Bureau of Labor Statistics and the Census Bureau. With limited visibility on recent economic trends, the Federal Reserve’s decision-making process has become more challenging, leaving markets to speculate about the timing and magnitude of potential policy adjustments. Despite the political gridlock, market expectations remain firmly tilted toward further monetary easing. The Fed is widely anticipated to cut interest rates by 25 basis points at its October 29 meeting, with another reduction likely before year-end. The prospect of lower U.S. rates has been weighing on the dollar, providing some support to the NZD/USD pair. Still, the broader tone in the market remains one of caution and consolidation. Investors are hesitant to take large directional bets until there is greater clarity on both U.S. fiscal developments and the outcome of the upcoming trade talks. A dovish signal from the Fed or progress in U.S.–China relations could lift risk sentiment and boost the Kiwi, while any setbacks may trigger renewed demand for the safe-haven dollar. For now, NZD/USD appears likely to remain range-bound in the short term, with traders closely monitoring the evolving macro backdrop and data calendar for fresh cues.