Home Daily Commentaries New Zealand trades lower shifting expectations around RBNZ rate cut

New Zealand trades lower shifting expectations around RBNZ rate cut

Brett Ottawa
Written by
Brett Ottawa

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market.

| Monday 19 May, 2025

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback currently trading at 0.5864 at time of writing. Over the past week, the New Zealand dollar (NZD) experienced a decline against the US dollar (USD), reflecting a broader trend of USD weakness driven by softer-than-expected US economic data and shifting expectations around Federal Reserve interest rate cuts. The NZD/USD exchange rate decreased by approximately 1.29% over the week, closing at around 0.5905 on Friday, May 16. This decline was part of a broader trend where the NZD reached a weekly high of 0.6015 and a low of 0.5905, reflecting market volatility during the week. The Reserve Bank of New Zealand (RBNZ) is scheduled to announce its next Official Cash Rate (OCR) decision on Wednesday, May 28. Economists widely anticipate a 25-basis point cut, reducing the OCR from 3.75% to 3.50%. This expectation follows a series of rate cuts aimed at stimulating economic activity amid a global economic slowdown and domestic recession. The RBNZ's recent Financial Stability Report highlighted increased financial stability risks due to global economic uncertainty, while noting that lower interest rates are easing financial stress for borrowers. The RBNZ's monetary policy stance remains data-dependent, with future rate decisions influenced by domestic economic conditions and global developments.

Key Movers

The US dollar has seen limited movement as markets digest the latest economic signals from the United States. U.S. consumer sentiment continued its downward trend in May 2025, reaching its lowest point since July 2022. The University of Michigan's preliminary Consumer Sentiment Index fell to 50.8 from 52.2 in April, marking the fifth consecutive monthly decline and the second-lowest reading on record.  In April 2025, U.S. producer prices unexpectedly declined, marking the largest monthly drop in five years. The Producer Price Index (PPI) for final demand fell by 0.5%, following a flat reading in March. This decrease was primarily driven by a 0.7% drop-in service prices, which includes significant declines in hotel and motel rates, airline fares, and portfolio management fees. Prices for final demand goods remained unchanged during the month. Despite the recent easing in producer prices, some economists caution that ongoing trade tensions and elevated tariffs may still pose risks to future inflation and economic stability.

Expected Ranges

  • NZD/USD: 0.5750 - 0.5950 ▲
  • NZD/EUR: 0.5150 - 0.5350 ▲
  • GBP/NZD: 2.2400 - 2.2600 ▼
  • NZD/AUD: 1.0700 - 1.0900 ▲
  • NZD/CAD: 0.8050 - 0.8250 ▲

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.