NZD eases against stronger US dollar as markets await New Zealand GDP data
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Daily Currency Update
The New Zealand dollar (NZD) weakened against the US dollar (USD) on Wednesday, as the NZDUSD pair traded lower amid a broad recovery in the greenback. The move comes after the release of stronger-than-expected US Nonfarm Payrolls (NFP) data for October and November, which boosted confidence in the US labour market and reinforced demand for the USD.The latest employment figures showed continued resilience in the US economy, easing concerns about a sharp slowdown and prompting investors to reassess expectations for US monetary policy. As a result, the USD regained momentum across global markets, putting renewed pressure on risk-sensitive currencies such as the NZD. Higher US yields following the data further supported the USD, making it more attractive relative to its counterparts.
Despite this headwind, the New Zealand dollar has shown relative resilience when compared with other major currencies. While it has struggled against the USD, the NZD has outperformed many of its peers, suggesting that domestic factors are helping to cushion the downside. Market participants appear cautious about taking aggressive short positions ahead of key economic data due later this week.
Attention is now firmly focused on New Zealand’s third-quarter Gross Domestic Product (GDP) figures, scheduled for release on Thursday. Economists expect the data to show that the economy expanded by 0.9% in the July–September period, following an equal-sized contraction in the second quarter. If confirmed, this rebound would signal that economic activity has regained some momentum after a challenging mid-year period.
A stronger-than-expected GDP outcome could provide short-term support for the NZD by reinforcing confidence in New Zealand’s economic outlook. It may also influence expectations around future policy decisions by the Reserve Bank of New Zealand (RBNZ), which has remained focused on balancing inflation risks with signs of slowing growth. Conversely, a weaker print could leave the NZD more vulnerable, particularly if the US dollar continues to benefit from upbeat economic data.
In the near term, the NZD/USD pair is likely to remain sensitive to developments in both economies. While US data continues to drive broad US dollar strength, domestic indicators such as GDP will play a crucial role in shaping sentiment toward the NZD . Traders are expected to remain cautious, with price action potentially becoming more volatile as markets digest fresh economic signals from both sides of the Pacific.
Key Movers
The US dollar continued to strengthen in midweek trading, with the US Dollar Index (DXY) rising around 0.4% to trade near the 98.60 level at the time of writing. The index, which measures the Greenback’s performance against a basket of six major currencies, reflects renewed demand for the USD as investors reassess the outlook for US monetary policy.Recent labour market data has played a key role in shaping sentiment. The latest US Nonfarm Payrolls (NFP) report, released on Tuesday, showed that the unemployment rate climbed to 4.6% in November. This marked the highest level since September 2021 and highlighted some cooling in labour market conditions. However, despite the uptick in unemployment, the data failed to significantly boost expectations that the Federal Reserve will shift toward a more dovish stance in the near term.
Instead, investors appear to be focusing on the broader resilience of the US economy and the Fed’s continued emphasis on inflation risks. While a rising jobless rate can often support the case for lower interest rates, policymakers have made it clear that inflation remains their primary concern. As a result, markets have been cautious about pricing in aggressive rate cuts, helping to underpin the US dollar.
Looking ahead, attention is now turning to the next major catalyst for markets: the US Consumer Price Index (CPI) data for November, scheduled for release on Thursday. This inflation report is expected to play a crucial role in shaping expectations for the Fed’s next policy moves. A stronger-than-expected CPI reading could reinforce the view that inflation pressures remain persistent, potentially keeping interest rates higher for longer and supporting further USD strength.
On the other hand, a softer inflation print may revive hopes that price pressures are easing more decisively, which could give the Fed greater flexibility to adopt a more accommodative stance in the months ahead. Such an outcome might weigh on the USD, particularly if combined with additional signs of slowing in the labour market.
For now, the US dollar remains supported by a cautious market environment and uncertainty around the pace of future policy easing. Traders are likely to remain data-dependent, with price action sensitive to upcoming economic releases. As the CPI report approaches, volatility across currency markets may increase, as investors position themselves for potential shifts in the Fed’s policy outlook.
Expected Ranges
- NZD/USD: 0.5700 - 0.5900 ▼
- NZD/EUR: 0.4800 - 0.5000 ▼
- GBP/NZD: 2.3050 - 2.3250 ▲
- NZD/AUD: 1.1300 - 1.1500 ▼
- NZD/CAD: 0.7850 - 0.8050 ▲