Kiwi dollar on edge ahead of crucial RBNZ call
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Daily Currency Update
The New Zealand dollar (NZD) experienced a week of mixed performance against major currencies from approximately June 29th to July 5th. While it remained relatively stable against the US dollar (NZD/USD), with a marginal gain of around 0.066%, and fluctuations between US$0.604 and US$0.611, it saw a slight decrease against the Australian dollar and the euro. Conversely, the NZD strengthened against the British pound and remained largely flat against the Japanese yen.Although specific New Zealand economic data releases for this past week were limited, broader trends and global sentiment continued to influence the Kiwi. Earlier reports in late June, for instance, indicated the NZD appreciating against the USD due to a shift towards riskier assets and dovish signals from Federal Reserve officials.
Looking ahead, the market's attention is firmly fixed on the Reserve Bank of New Zealand's (RBNZ) Official Cash Rate (OCR) review on Wednesday, July 9th. While some economists still anticipate further rate cuts this year, there's growing uncertainty about an immediate cut this week. This stems from conflicting economic signals: some stronger-than-expected data, such as the March quarter GDP figure, is at odds with other high-frequency data suggesting a loss of economic momentum in the second quarter.
Consequently, the market currently prices in a less than 20% chance of a cut this week, with a higher probability (over 70%) for an August reduction. This evolving sentiment will be a key determinant of the NZD's direction in the coming week.
Key Movers
The US Dollar Index (DXY) experienced a challenging week from approximately June 30th to July 5th, 2025, continuing its downward trend. It closed around 96.98, dropping approximately 0.19% by July 4th and a more significant 0.29% over the week. This extends a notable decline, with some reports indicating a 2.5% fall throughout June, its sharpest first-half retreat since 1973. While the DXY had seen intraday fluctuations, including a high around 99.42 earlier in June, it was largely pushed lower by an "outside-weekly reversal." Towards the end of the week, the index attempted to "carve a local bottom," rebounding on July 3rd following the release of impressive US employment figures.The Non-Farm Payrolls report for June 2025, released by the U.S. Bureau of Labor Statistics (BLS) on July 3rd, revealed that the economy added a robust 147,000 jobs. This figure significantly surpassed market expectations of around 110,000 jobs and followed an upwardly revised 144,000 jobs added in May. This surprisingly strong headline job creation suggested continued resilience in the US labour market. Initially, this data led to a strengthening of the US dollar and a reduction in market expectations for an immediate Federal Reserve rate cut (e.g. in July), as such strong employment numbers could lessen the urgency for the Fed to ease monetary policy rapidly.
Expected Ranges
- NZD/USD: 0.5950 - 0.6150 ▲
- NZD/EUR: 0.5050 - 0.5250 ▲
- GBP/NZD: 2.2450 - 2.2650 ▼
- NZD/AUD: 1.0700 - 1.0900 ▼
- NZD/CAD: 0.8150 - 0.8350 ▲