Kiwi dollar under pressure as RBNZ easing and key us data weigh on sentiment
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Daily Currency Update
The NZD/USD pair moved slightly lower on Tuesday, trading near US$0.5665 at time of writing. The New Zealand Dollar (NZD) continues to face headwinds, largely driven by expectations of further policy easing from the Reserve Bank of New Zealand (RBNZ). With investors increasingly convinced that additional rate cuts may be on the horizon, the currency remains under pressure against the broadly steadier US Dollar. Market sentiment surrounding the NZD shifted notably following the RBNZ’s October meeting, where the central bank surprised markets with a larger-than-anticipated adjustment. Policymakers lowered the Official Cash Rate (OCR) by 50 basis points to 2.5%, a move that exceeded the consensus forecast and signaled a more proactive approach to supporting the slowing economy. The RBNZ justified the decision by pointing to clear signs of weakening growth momentum and growing confidence that inflation is now firmly trending toward target after a prolonged period of elevated price pressures. The backdrop for this rate cut included a sharper-than-expected contraction in economic activity earlier in the year. New Zealand’s Gross Domestic Product (GDP) declined by 0.9% in the second quarter of 2025, underscoring the challenges facing the economy. Soft consumer demand, cooling housing activity, and subdued business investment have all contributed to a sluggish environment. With these factors in mind, the central bank opted to act decisively, prioritizing growth stabilization over maintaining restrictive monetary conditions. For currency traders, the implications of this policy shift are straightforward: a more dovish RBNZ generally weakens the NZD, especially when contrasted with a US Federal Reserve that remains cautious about declaring victory over inflation. This dynamic has helped push NZD/USD lower in recent sessions. Looking ahead, the market’s immediate focus turns to US catalysts that could drive short-term volatility in the pair. The release of the Federal Open Market Committee (FOMC) Minutes on Wednesday will offer fresh insight into the Fed’s policy outlook and the degree of internal debate regarding future rate adjustments. Investors will closely examine whether officials appear open to easing or whether concerns about lingering inflation remain prominent. Following the Minutes, attention will quickly shift to the highly anticipated US Nonfarm Payrolls (NFP) report for September. Labor market data has been a central pillar of the Fed’s decision-making, and any signs of softening could revive expectations for US rate cuts later in the year. Stronger-than-expected figures, however, could bolster the US Dollar and place additional pressure on NZD/USD. Overall, the New Zealand Dollar remains vulnerable as domestic economic concerns mount, while global markets await key US data that could shape the next major move in the currency pair.Key Movers
The US Dollar (USD) remained on the back foot on Tuesday as traders assessed a series of mixed economic indicators released earlier in the day. While none of the data points were dramatic enough to spark sharp market moves, together they contributed to a broader narrative of a cooling US economy, reinforcing expectations that the Federal Reserve may be edging closer to policy easing. Labor market data, typically among the most influential for currency markets, continued to show signs of gradual softening. The latest ADP figures indicated that private-sector payrolls declined by an average of 2,500 jobs per week over the four weeks ending November 1. This followed an even steeper decline in the previous period, suggesting that hiring momentum is losing steam as businesses respond to higher borrowing costs and moderating demand. Although the declines are not yet alarming, they hint at a shift toward more cautious employment strategies. Weekly jobless claims added to the picture of a labor market that is becoming less tight. Initial Jobless Claims for the week of October 18 rose to 232,000, marking a slight increase that aligns with the broader trend of gradually rising unemployment filings. More importantly, Continuing Claims climbed to 1.957 million, reaching their highest levels in months. Rising continuing claims typically indicate that displaced workers are finding it more challenging to secure new employment, a sign that demand for labor is starting to soften. Meanwhile, the industrial sector offered a mixed but somewhat more encouraging update. Factory Orders for August rose by 1.4%, rebounding after a 1.3% contraction in July. However, the improvement failed to generate much market reaction, as investors viewed the rebound as modest rather than a signal of renewed manufacturing strength. Many analysts believe that factories are still grappling with uneven demand and lingering supply-chain adjustments, limiting the impact of monthly fluctuations. All of these data points arrive ahead of a key event on investors’ calendars: the release of the delayed September Nonfarm Payrolls (NFP) report, due Thursday. The NFP is typically one of the most closely watched indicators each month, and its delayed publication has only heightened anticipation. Market participants are hoping the report will provide clearer direction on the labor market’s underlying health and, by extension, the Federal Reserve’s near-term policy path. According to the CME FedWatch Tool, traders currently assign roughly a 43% probability to a 25-basis-point rate cut in December. This pricing reflects growing caution as signs of economic cooling accumulate. A weaker-than-expected NFP print could further boost expectations of a December cut, while a stronger reading might give the USD some temporary relief by tempering dovish bets. For now, the US Dollar remains pressured as markets await Thursday’s crucial data release, which could set the tone for Fed policy expectations into year-end.Expected Ranges
- NZD/USD: 0.5550 - 0.5750 ▼
- NZD/EUR: 0.4800 - 0.5000 ▲
- GBP/NZD: 2.3100 - 2.3300 ▼
- NZD/AUD: 1.1400 - 1.1600 ▲
- NZD/CAD: 0.7800 - 0.8000 ▼