Kiwi dollar edges higher as soft us jobs data and steady New Zealand outlook
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Daily Currency Update
The NZD/USD pair traded with a positive bias on Friday, benefiting from renewed pressure on the US dollar following weaker-than-expected US employment data. The softer labor market figures dampened demand for the Greenback, allowing the New Zealand dollar to gain traction and extend its modest recovery. As trading progresses, market participants will remain attentive to comments from Federal Reserve officials scheduled to speak later in the day, including Beth Hammack and Austan Goolsbee, for fresh cues on the future path of US monetary policy.The disappointing US employment data has reinforced expectations that the Federal Reserve may be nearing the end of its tightening cycle. Signs of cooling in the US labor market have raised hopes that interest rates may remain on hold for an extended period, or potentially move lower in the months ahead if inflation continues to ease. This outlook has weighed on the US dollar broadly, providing near-term support to higher-yielding and risk-sensitive currencies such as the New Zealand dollar.
On the domestic front, recent economic data from New Zealand has offered additional encouragement to Kiwi bulls. According to figures released by Business NZ on Friday, the Performance of Manufacturing Index (PMI) rose to 51.4 in November. A reading above the 50 mark signals expansion, indicating that New Zealand’s manufacturing sector has now grown for the second consecutive month. The latest figure also suggests stability in activity levels, broadly matching the pace recorded in October and pointing to a gradual improvement in business conditions.
The steady performance of the manufacturing sector adds to signs that the New Zealand economy may be finding its footing after a period of slowing growth. While challenges remain, the PMI data has helped ease concerns about a sharper downturn and has provided a supportive backdrop for the local currency.
Meanwhile, the Reserve Bank of New Zealand (RBNZ) continues to play a key role in shaping expectations for the Kiwi. At its November policy meeting, the RBNZ reduced the Official Cash Rate (OCR) by 25 basis points to 2.25%, marking another step in its easing cycle. However, the central bank struck a cautious tone, emphasizing that future policy decisions will be guided by incoming economic data and the evolving inflation outlook.
Analysts increasingly believe that the RBNZ’s rate-cutting cycle may be nearing its end, particularly if inflation pressures remain contained and economic indicators continue to stabilize. This perception has helped limit downside pressure on the New Zealand dollar, as markets begin to price in a more balanced policy outlook going forward.
Looking ahead, the NZD/USD pair is likely to remain sensitive to developments in US economic data, Fed commentary, and global risk sentiment. For now, the combination of softer US data, improving domestic indicators, and a potentially less accommodative RBNZ stance provides a constructive environment for the Kiwi to hold its ground against the US dollar.
Key Movers
The US Federal Reserve took another step toward easing monetary policy last week, announcing a quarter-percentage-point reduction in its benchmark interest rate. The decision, delivered on Wednesday, lowered the target range to 3.50%–3.75% and marked the third consecutive rate cut this year. The move was widely anticipated by markets and reflects the central bank’s growing confidence that inflation pressures are easing while economic growth shows signs of moderation.Speaking at the post-meeting press conference, Fed Chair Jerome Powell struck a measured and cautious tone. He noted that the US central bank is now “well positioned to wait and see how the economy evolves,” signaling a shift away from aggressive policy action in the near term. Powell’s remarks suggested that policymakers are comfortable pausing to assess incoming data before making further adjustments. Supporting this view, updated projections from Fed officials indicated expectations for just one additional quarter-percentage-point rate cut in 2026, reinforcing the idea that the bulk of policy easing may already be behind us.
Meanwhile, recent US labor market data has added to speculation that economic momentum may be slowing. On Thursday, the US Department of Labor reported that weekly Initial Jobless Claims rose to 236,000 for the week ending December 6. This figure exceeded market expectations of 220,000 and represented a sharp increase from the previous week’s revised reading of 192,000. Notably, the latest jump marked the largest weekly rise in jobless claims since mid-July 2021.
The unexpected surge in claims has raised concerns about potential softening in the US labor market, which has long been a key pillar of economic resilience. As a result, the data triggered some selling pressure on the US dollar, as investors reassessed the outlook for growth and interest rates. A cooling labor market could strengthen the case for maintaining a more accommodative policy stance, particularly if similar trends persist in upcoming employment reports.
Looking ahead, the US economic calendar is relatively quiet on Friday, with no major market-moving data releases scheduled. In the absence of fresh economic indicators, the US dollar is likely to take its cues from speeches by influential members of the Federal Open Market Committee (FOMC). Any hints regarding future policy direction or assessments of economic conditions could influence short-term currency movements.
Beyond central bank commentary, broader market sentiment will also play a key role in shaping demand for the US dollar. Shifts in risk appetite, driven by global economic developments or financial market volatility, could create short-term trading opportunities. For now, the combination of recent rate cuts, softer labor data, and a cautious Fed outlook leaves the US dollar sensitive to incoming signals as markets look for clarity on the next phase of monetary policy.
Expected Ranges
- NZD/USD: 0.5700 - 0.5900 ▲
- NZD/EUR: 0.4800 - 0.5000 ▲
- GBP/NZD: 2.3100 - 2.3300 ▼
- NZD/AUD: 1.1300 - 1.1500 ▲
- NZD/CAD: 0.7800 - 0.8000 ▼