Home Daily Commentaries New Zealand trades higher driven by domestic economic data and a weakening US dollar  

New Zealand trades higher driven by domestic economic data and a weakening US dollar  

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 26 May, 2025

Daily Currency Update

Last week, the New Zealand dollar (NZD) experienced a notable appreciation against the US dollar (USD), driven by a combination of domestic economic data and a weakening USD. The NZD/USD exchange rate closed on Friday, May 23, at approximately 0.5990, marking a 1.8% gain for the week. This performance made the NZD the top-performing G10 currency against the USD during that period. The NZD's recent strength reflects both robust domestic economic indicators and a shift in investor sentiment away from the USD. However, ongoing fiscal concerns in the US and global economic developments will continue to influence the NZD/USD exchange rate in the coming weeks. On the local front last week in the first quarter of 2025, New Zealand's retail sales volumes increased by 0.8% quarter-on-quarter, surpassing expectations of a 0.3% decline. This positive performance was driven by a 3.4% rise in food and recreational goods sales, indicating strong consumer demand. Conversely, sales in pharmaceutical and other store-based retailing declined by 3.4% during the same period. This uptick in retail activity contributed to a 1.8% appreciation of the New Zealand dollar (NZD) against the US dollar (USD) last week, as investors responded positively to the robust economic data and a weakening USD.

Key Movers

Over the past week, the U.S. dollar experienced notable volatility, influenced by a combination of fiscal developments, credit rating downgrades, and trade policy announcements. The U.S. dollar Index (DXY) decreased by approximately 0.85% during the week ending May 23, 2025, closing at 99.11. This marks a continuation of the downward trend observed since early May. Moody's downgraded the U.S. government's credit rating from Aaa to Aa1, citing concerns over rising government debt and interest payment ratios. This downgrade contributed to a decline in investor confidence and a weakening of the dollar. The U.S. House of Representatives approved a significant tax and spending bill, projected to add $3.8 trillion to the national debt over the next decade. This raised concerns about fiscal sustainability, leading to a sell-off in U.S. bonds and further pressure on the dollar. President Trump's announcement of new tariffs, including a 50% levy on European goods and a potential 25% tariff on foreign-manufactured smartphones, introduced uncertainty into global markets. These measures led to a decline in both European and U.S. stocks and added to the downward pressure on the dollar.

Expected Ranges

  • NZD/USD: 0.5900 - 0.6100 ▲
  • NZD/EUR: 0.5200 - 0.5400 ▲
  • GBP/NZD: 2.2450 - 2.2650 ▼
  • NZD/AUD: 1.0750 - 1.0950 ▲
  • NZD/CAD: 0.8100 - 0.8300 ▼

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.