New Zealand dollar steady below weekly highs ahead of key U.S. inflation data
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Daily Currency Update
The New Zealand dollar (NZD) traded largely flat against the US dollar (USD) on Thursday, hovering just below the top of its weekly trading range around 0.5875, as markets remained cautious ahead of key US economic data releases. With limited directional momentum, the pair struggled to break higher, as traders adopted a wait-and-see approach in anticipation of the upcoming US GDP figures later today and, more critically, Friday’s release of the PCE Price Index—the Federal Reserve’s preferred inflation measure.On Wednesday, the NZD/USD pair found support near the 0.5800 level, bouncing modestly in response to a broadly weaker US dollar. This weakness followed dovish commentary from New York Fed President John Williams, who signaled that a September interest rate cut remains on the table, prompting a decline in US Treasury yields and easing demand for the greenback.
Despite the brief rebound, market participants remain hesitant to establish firm positions ahead of the data-heavy calendar. The focus is squarely on Friday’s PCE Price Index, which could significantly influence expectations for the Fed’s next move. Headline inflation is forecast to have held steady at 2.6% year-on-year in July, while the core PCE—a key gauge for underlying inflation—is projected to rise slightly to 2.9%, up from 2.8% in June. A stronger-than-expected reading could challenge the market’s rate-cut narrative, while a softer result may reinforce expectations for monetary easing as early as next month.
Until then, the NZD is likely to remain rangebound, with short-term direction hinging on the tone of upcoming US macroeconomic indicators and evolving Fed policy expectations.
Key Movers
The US dollar (USD) has relinquished most of the gains it made yesterday and remains confined within a tight trading range for the month. Market attention today is firmly focused on the latest weekly jobless claims data, a key indicator of the health of the US labor market. Initial jobless claims are forecasted to decline slightly to 230,000, following a rise to 235,000 in the week ending August 16—the highest level seen since June. Should new filings continue to increase, it could heighten concerns about a weakening labor market and strengthen market expectations for the Federal Reserve to ease monetary policy further.Currently, Fed funds futures reflect nearly a 90% probability of a 25-basis point rate cut at the September 17 Federal Open Market Committee (FOMC) meeting, with markets pricing in a total of 50 basis points of easing by the end of the year. These expectations are driven by signs of slowing economic momentum and rising uncertainties around inflation and employment.
Adding to today’s market-moving events is a speech by Fed Governor Christopher Waller, who is widely regarded as a leading contender to succeed Jerome Powell when his Fed chair term expires in May 2026. Waller has consistently shown a dovish tilt, having voted for a 25 basis point rate cut at the last FOMC meeting on July 29-30. In his recent statements, he argued that tariffs contribute to inflation only temporarily, that monetary policy is currently too tight, and that downside risks to the labor market have increased remarks that underscore the growing consensus within the Fed for potential easing in the months ahead.
Together, these factors suggest that investors will be closely watching today’s jobless claims data and Waller’s remarks for clues on the Fed’s next moves and the broader trajectory of the US dollar.
Expected Ranges
- NZD/USD: 0.5800 - 0.6000 ▲
- NZD/EUR: 0.4950 - 0.5150 ▲
- GBP/NZD: 2.2900 - 2.3100 ▼
- NZD/AUD: 1.1000 - 1.1200 ▼
- NZD/CAD: 0.8000 - 0.8200 ▲