Kiwi dollar inches higher overnight amid softer USD and RBNZ rate cut expectations
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Daily Currency Update
Last night, the New Zealand dollar (NZD) posted a modest gain against the US dollar, appreciating by approximately 0.4% to trade near US$0.5914–$0.5915. This increase was primarily driven by easing pressure on the US dollar, amid growing market expectations that the Federal Reserve will soon begin cutting interest rates, coupled with a general softening of global risk sentiment. However, the NZD’s gains remained subdued due to softer domestic economic data, notably a rise in New Zealand’s unemployment rate, which reinforced expectations that the Reserve Bank of New Zealand (RBNZ) is likely to implement further rate cuts. In the near term, the Kiwi is expected to face continued downward pressure, with ANZ projecting it could decline toward US$0.55 by mid-2025 as ongoing domestic monetary easing and persistent weakness in global demand weigh on the currency’s appeal. Recent labor market indicators, including an increase in the unemployment rate to 5.2% and declines in employment and participation rates, have further solidified market sentiment around RBNZ easing, dampening the NZD’s momentum. Looking ahead, forecasts from ExchangeRates.org.uk suggest the NZD may recover modestly to around US$0.5959 by December 2025 and potentially climb further to US$0.6017 by March 2026, supported by positive technical indicators and an improving global risk environment. Overall, while the near-term outlook for the New Zealand dollar remains soft, there is cautious optimism for a gradual recovery toward late 2025, contingent on developments in monetary policy and broader global economic conditions.Key Movers
Overnight, the US Dollar Index (DXY) experienced a modest decline, closing at 99.1410, after reaching a daily high of 98.9560 and dipping to a low of 98.6030. This slight pullback reflects growing market expectations that the Federal Reserve may soon begin cutting interest rates, prompted by mounting evidence of a cooling US economy and dovish signals from Fed officials. Despite the decline, the DXY remains comfortably above the 98.00 level, demonstrating underlying resilience amid ongoing volatility. The index’s movement continues to be shaped by key economic data releases and evolving Fed policy outlooks, with investors closely watching for any fresh indications on the trajectory of future monetary policy adjustments. In related news, China’s trade surplus for July 2025 narrowed significantly to $98.24 billion, down from $114.77 billion in June. This reduction was largely driven by a sharp 21.67% drop in exports to the United States, a direct consequence of recently imposed US tariffs. Nevertheless, China’s overall exports still grew by 7.2% year-on-year, buoyed by stronger shipments to Southeast Asia and other alternative markets. Additionally, imports surprised analysts by rising 4.1%, defying earlier expectations of a contraction. Despite the shrinking surplus, China’s trade figures for July highlight the country’s resilience amid ongoing global trade tensions. The noticeable shift in export destinations, combined with increased import activity, points to strategic efforts to diversify trade partnerships and bolster domestic demand. However, with the US-China tariff truce set to expire on August 12, further uncertainties loom over the trade outlook, potentially adding volatility to global markets in the near term.Expected Ranges
- NZD/USD: 0.5850 - 0.6050 ▲
- NZD/EUR: 0.5000 - 0.5200 ▲
- GBP/NZD: 2.2400 - 2.2600 ▲
- NZD/AUD: 1.0800 - 1.1000 ▲
- NZD/CAD: 0.8050 - 0.8250 ▲