New Zealand dollar eases as risk sentiment weakens amid US trade tensions
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Daily Currency Update
The New Zealand Dollar (NZD) trimmed earlier gains against the US Dollar (USD) on Friday, retreating from weekly highs near 0.5770, as traders weighed a series of mixed US macroeconomic releases and renewed concerns over global trade tensions. The latest market action underscores investor caution, with the USD maintaining a broadly steady tone within recent ranges against its major peers. The day’s moves followed a fresh round of US economic data, including Consumer Price Index (CPI) and Purchasing Managers’ Index (PMI) figures, which delivered no clear signal about the direction of US growth or inflation. The uneven data kept market participants uncertain about the Federal Reserve’s next policy steps, limiting follow-through in the USD’s recent recovery. Beyond data, risk sentiment was further undermined by escalating trade-related headlines. US President Donald Trump announced that negotiations with Canada had been “terminated,” only days after unveiling new restrictions on software exports to China. These developments have reignited investor concerns over global trade stability, souring demand for risk-sensitive currencies such as the NZD and the Australian Dollar (AUD). From a technical perspective, the NZD/USD pair is showing signs of consolidation after failing to hold above 0.5760, suggesting the recent rebound may be losing momentum. Immediate support lies near 0.5710, with stronger resistance now seen around 0.5780. A sustained break below the lower boundary could open the door for a deeper retracement toward 0.5670, while a recovery above 0.5780 would be needed to reassert short-term bullish pressure. Looking ahead, traders will closely monitor upcoming US economic releases and any further trade-related announcements for clues on risk appetite. Domestically, attention will turn to next week’s New Zealand employment data, which may offer fresh insight into the Reserve Bank of New Zealand’s (RBNZ) policy outlook and the broader trajectory for the Kiwi dollar.Key Movers
The US Dollar Index (DXY), which measures the Greenback’s performance against a basket of six major currencies, traded near 99.00 on Friday, holding modest weekly gains of around 0.4%. Despite muted price action, the dollar remains under scrutiny as investors assess the implications of softer US inflation data and improving business activity indicators for the Federal Reserve’s near-term policy outlook. According to data released by the US Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) rose 0.3% month-on-month in September, slightly below the 0.4% consensus forecast and easing from August’s 0.4% gain. On an annual basis, headline inflation came in at 3.0%, missing expectations of 3.1%, though still edging higher from 2.9% in August. The Core CPI, which strips out volatile food and energy prices, advanced 0.2% MoM and 3.0% YoY, both figures also undershooting market estimates. The softer inflation readings reinforced investor confidence that the Federal Reserve will maintain its easing trajectory following September’s rate cut. Market pricing now fully anticipates another 25-basis-point reduction at the upcoming October 29–30 FOMC meeting, as policymakers continue efforts to support growth amid moderating inflation pressures and mixed labor market signals. Meanwhile, the latest survey data offered a more upbeat picture of US business activity. The S&P Global Flash Composite PMI climbed to 54.8 in October from 53.9 in September, marking the strongest private-sector expansion in three months. The improvement was driven by a rebound in the services sector, where the PMI jumped to 55.2, while the manufacturing gauge edged higher to 52.2, signaling modest but sustained expansion across both segments of the economy. In the currency markets, the dollar’s mixed performance reflects the tug-of-war between easing inflation and resilient economic activity. A sustained break above the 99.30 level on the DXY could expose the next resistance near 99.70, while a dip below 98.60 would suggest renewed bearish momentum. Looking ahead, traders will focus on upcoming Fed communications and key economic data—including the Personal Consumption Expenditures (PCE) Price Index and nonfarm payrolls report—for further confirmation of the central bank’s policy path heading into year-end.Expected Ranges
- NZD/USD: 0.5650 - 0.5850 ▼
- NZD/EUR: 0.4850 - 0.5050 ▲
- GBP/NZD: 2.3050 - 2.3250 ▼
- NZD/AUD: 1.1200 - 1.1400 ▼
- NZD/CAD: 0.7950 - 0.8150 ▲