Kiwi dollar extends losing streak after RBNZ rate cut  

Daily Currency Update

The New Zealand Dollar (NZD) continued to lose ground against the US Dollar (USD) for a fourth straight session on Friday, with NZD/USD hovering around 0.5750 during the Asian trading hours. The pair remains under pressure following a mix of soft domestic data and a larger-than-expected interest rate cut by the Reserve Bank of New Zealand (RBNZ). Markets were left digesting the latest Business NZ Performance of Manufacturing Index (PMI), which held steady at 49.9 in September. While unchanged from the previous reading, the figure remains below the 50.0 threshold that separates expansion from contraction—signalling continued weakness in New Zealand’s manufacturing sector. Adding to the Kiwi’s woes was the RBNZ’s surprise decision on Wednesday to slash the Official Cash Rate by 50 basis points, bringing it down to 2.50%—its lowest level since July 2022. Markets had largely expected a smaller, 25-basis-point cut, so the more aggressive move signaled growing concern within the central bank about the domestic economic outlook. With market pricing now suggesting a strong chance of another 25-basis-point cut in November, sentiment around the NZD remains fragile. On the other side of the equation, the US dollar has stayed firm, bolstered by rising global risk aversion and ongoing political uncertainty in Washington. Investors continue to keep a close eye on developments surrounding the US government shutdown, as the Senate remains gridlocked over legislation to reopen the government. In times of heightened uncertainty, the USD typically benefits from safe-haven flows, further weighing on high-beta currencies like the NZD. Looking ahead, traders will be watching for any signs of progress in US budget talks, as well as upcoming New Zealand economic data for clues on the RBNZ’s next move. Until then, the Kiwi may struggle to regain its footing.