Home Daily Commentaries NZD again tests 2025 highs following a slowdown in US economic activity

NZD again tests 2025 highs following a slowdown in US economic activity

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Thursday 5 June, 2025

Daily Currency Update

The New Zealand dollar outperformed Wednesday, again testing a break above US$0.60 amid softening US macroeconomic markers. Having drifted US$0.5990 and $US0.6010 for much of the domestic session, the NZD extended toward intraday highs just short of US$0.6040 overnight and has largely retained those gains leading into this morning's open of US$0.6029 at time of writing. The NZD found support in a weaker USD after ISM services data printed well short of expectations and ADP employment numbers were way below market estimates. While both aren’t the most reliable markers of activity and labour market performance, the scale of the miss (when marked back to expectations) forced markets to take notice, prompting analysts to firm up bets for a Federal Reserve rate cut in September.

With the USD on the back foot, our attentions now turn to China Caixin Services PMI, the European Central Bank policy meeting and US unemployment claims for direction through Thursday.

Key Movers

The US dollar fell against all majors through trade on Thursday, dragging the USD DXY and BBDXY indexes lower as market firm up bets for a Federal Reserve rate cut in September. The ISM Services index fell below 50 from 51.6, well short of expectations for a small uptick in activity. While subindices within the report pointed to stability across the labour market, a sharp fall in new orders and a rise in the prices paid index suggest the cost of President Trump’s tariff agenda is now filtering into the real economy. With ADP’s employment report falling well short of expectations as well, treasury yields fell, dragging the US dollar with them. The euro moved back toward 1.1450 while the pound consolidated a break above 1.3550 while the yen has again pushed the dollar back below 143.

Our attentions turn now to the European Central Bank and its monetary policy meeting. We expect policymakers will issue a 25-point cut, lowering rates to 2%. This will mark the 8th cut in this cycle. Our attentions will be keenly attuned to the accompanying statement and commentary for guidance on future policy direction.

Expected Ranges

  • NZD/USD: 0.5950 - 0.6050 ▲
  • NZD/EUR: 0.5220 - 0.5320 ▲
  • GBP/NZD: 2.2300 - 2.2600 ▼
  • NZD/AUD: 0.9220 - 0.9320 ▲
  • NZD/CAD: 0.8200 - 0.8300 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.