Kiwi dollar steady as weak job data fuels rate-cut expectations
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Daily Currency Update
The New Zealand dollar (NZD) held steady on Thursday, with the NZD/USD pair trading around 0.5653 at the time of writing, little changed on the day. The pair paused after a three-day winning streak, as investors weighed fresh concerns about the health of New Zealand’s labour market and the growing likelihood of further monetary easing by the Reserve Bank of New Zealand (RBNZ). Recent economic data has painted a more cautious picture of the local economy. Last week, Stats NZ reported that the unemployment rate remained at 5.3% in the third quarter, the highest level in nine years, while job creation showed little sign of improvement. The combination of slower hiring and a cooling job market has raised worries about domestic demand, prompting traders to reassess how aggressively the RBNZ might act in the coming months. Market expectations now lean toward a rate cut in December, with most investors anticipating a 25-basis-point reduction in the official cash rate. A smaller group sees a chance of a deeper 50-basis-point move if economic data continues to weaken. Such expectations have weighed on the kiwi this week, limiting its recent momentum against the U.S. dollar. Despite the softer labour figures, inflation expectations for the fourth quarter held steady at 2.8%, according to the latest surveys. This suggests that price pressures are easing gradually, giving the RBNZ more flexibility to adopt a supportive stance without risking a sharp rebound in inflation. Globally, the U.S. dollar has shown mixed performance, with investors waiting for fresh cues from upcoming U.S. inflation and retail sales data. For now, sentiment toward risk-sensitive currencies, like the New Zealand dollar, remains cautious, especially as global growth concerns persist. Looking ahead, traders will keep a close eye on domestic economic indicators and RBNZ communications for any signals about the pace and timing of future rate moves. While the kiwi’s near-term outlook remains subdued, a clearer policy direction and evidence of economic stabilisation could help the currency regain some footing later this year.Key Movers
The pound sterling (GBP) advanced on Thursday, supported by broad U.S. dollar (USD) weakness as Washington’s government reopening lifted investor sentiment and set the stage for a busy week of economic data ahead. The GBP/USD pair climbed to a two-week high of 1.3197, up 0.46% on the day. The dollar’s decline follows the U.S. government’s partial reopening, which will allow key economic releases to resume after several weeks of delay. Market participants are now looking ahead to a string of upcoming reports, including the September Non-farm Payrolls data, expected next week. According to Fox Business correspondent Edward Lawrence, sources suggest that the delayed jobs report could be published soon, offering the Federal Reserve (Fed) and traders fresh insight into the state of the U.S. labor market. For now, however, U.S. economic data remains limited, leaving the dollar under pressure. The U.S. Dollar Index (DXY), which measures the greenback against six major peers, fell to around 99.30, its lowest level in nearly two weeks. According to the CME FedWatch Tool, markets are pricing a 67% probability that the Fed will cut interest rates by 25 basis points to 3.50%–3.75% in December. If confirmed, this would mark the third consecutive rate cut by the U.S. central bank this year. Across the Atlantic, however, the U.K. faces its own economic challenges. The latest Gross Domestic Product (GDP) data showed that Britain’s economy contracted 0.1% month-on-month in September, missing forecasts for flat growth. On a yearly basis, GDP grew 1.3%, slightly below the 1.4% pace seen in August. The weaker figures reinforced expectations that the Bank of England (BoE) could move toward a rate cut at its next meeting. Market pricing now suggests an 80% chance of a 25-basis-point reduction in the BoE’s Bank Rate, with traders also anticipating further easing of up to 50 basis points in 2026. However, investors remain cautious ahead of the Autumn Budget due on November 26, which may influence fiscal and monetary policy outlooks. For now, the pound is enjoying some breathing room thanks to a softer dollar, though its longer-term trajectory will depend on whether the U.K.’s slowing growth forces the BoE’s hand sooner rather than later.Expected Ranges
- NZD/USD: 0.5550 - 0.5750 ▲
- NZD/EUR: 0.4750 - 0.4950 ▲
- GBP/NZD: 2.3200 - 2.3400 ▼
- NZD/AUD: 1.1450 - 1.1650 ▼
- NZD/CAD: 0.7850 - 0.8050 ▼