New Zealand dollar trading below US$0.59

Daily Currency Update

The New Zealand dollar is stronger this morning when valued against the Greenback currently trading at 0.5840 at time of writing. The NZD/USD pair extended its losses on Friday, declining by 0.54% to its lowest level since early November. The Kiwi pair remains on the backfoot as the US dollar (USD) performs strongly across the board on expectations that the Federal Reserve (Fed) will follow the interest rate cut path more gradually. The New Zealand dollar is forecast to weaken around 6% in the coming months as a slowing economy prompts investors to price in aggressive interest rate cuts from the nation’s central bank. New Zealand’s Reserve Bank could be on the cusp of becoming the most aggressive rate-cutting central bank if it slashes the cash rate by a massive 0.75 percentage points next week in response to a deteriorating economy. Financial markets imply a one-in-five chance of a super-sized cut to 4 per cent on November 27, the last policy meeting of 2024. They are fully priced for a half-a-point reduction which would bring it under the Australian rate for the first time since 2013, outside the pandemic in March 2020. Since August, the RBNZ eased policy by 75 basis points in just two meetings as the economy shrank and its gross domestic product per capita, a broad measure of living standards, fell for the seventh quarter in a row.