Kiwi dollar falls below 0.5800 amid renewed US dollar strength and risk-off sentiment
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Daily Currency Update
The New Zealand dollar (NZD) dropped below the psychologically significant 0.5800 level against the US dollar (USD) on Thursday, as global risk appetite waned and the greenback regained broad-based strength. The NZD/USD pair extended its recent decline to touch fresh multi-week lows, with the move driven by a combination of macroeconomic headwinds, firm US data and cautious investor positioning ahead of key central bank meetings. The US dollar remained well-supported following a series of resilient economic indicators that reinforced expectations the Federal Reserve may keep interest rates elevated for an extended period. With markets continuing to price out the likelihood of near-term rate cuts, US Treasury yields have climbed, further boosting demand for the dollar at the expense of risk-sensitive currencies like the Kiwi. In addition, lingering concerns over China’s economic slowdown and its impact on global demand have weighed on the New Zealand dollar, which is highly exposed to trade dynamics in the Asia-Pacific region. Commodity-linked currencies such as the NZD tend to underperform during periods of heightened uncertainty or weakening global growth expectations. Locally, focus is now turning to the Reserve Bank of New Zealand’s (RBNZ) upcoming monetary policy decision scheduled for next week. While the central bank is widely expected to hold its Official Cash Rate steady at 5.50%, markets will be closely watching the policy statement for any shift in tone regarding inflation risks, domestic economic momentum, and the outlook for rate cuts in 2024. A firm break below the 0.5800 level raises the risk of further downside toward the next technical support zone around 0.5750. On the upside, initial resistance is seen near the 0.5825–0.5840 area, with stronger selling interest expected around the 0.5860 mark, which capped gains earlier this week. Until clearer guidance emerges from the RBNZ or a shift in global sentiment occurs, the Kiwi is likely to remain vulnerable to external pressures, particularly movements in the US dollar and developments in China.Key Movers
The US economy grew more strongly from April to June than earlier reports suggested. According to the latest data from the Bureau of Economic Analysis (BEA), the country’s Gross Domestic Product (GDP) increased at an annual rate of 3.8% in the second quarter of 2025. This is higher than the previous estimate of 3.3%, showing that economic activity picked up more than expected during that period. However, growth in the first quarter was revised downward, showing a slight contraction of 0.6%. This means the economy shrank slightly from January to March before recovering in the second quarter. One of the biggest reasons for the upward revision in the second quarter was stronger consumer spending. Americans spent more on things like transportation, financial services, and insurance than previously thought. Consumer spending grew at an annual rate of 2.5%, compared to the earlier estimate of 1.6%. This suggests that households were more confident and active in the economy than originally reported. On the other hand, exports were revised down slightly, which offset some of the gains from consumer spending. These updated figures come just days after the Federal Reserve decided to cut interest rates for the first time this year. The central bank made this move in response to signs of a slowdown in the labor market, aiming to support the economy. The revised GDP data offers a more positive picture of economic growth, but the Fed will continue to watch key indicators closely to decide on future policy moves.Expected Ranges
- NZD/USD: 0.5650 - 0.5850 ▼
- NZD/EUR: 0.4850 - 0.5050 ▼
- GBP/NZD: 2.3100 - 2.3300 ▲
- NZD/AUD: 1.1200 - 1.1400 ▼
- NZD/CAD: 0.7900 - 0.8100 ▼