New Zealand dollar steadies as markets weigh RBNZ outlook and recession risks
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Daily Currency Update
The New Zealand Dollar (NZD) held steady against the U.S. Dollar (USD) on Tuesday, trading near US$0.5656 during European hours after a quiet session in early trading. The NZD/USD pair continues to move sideways as investors assess fresh data on inflation expectations and the broader outlook for New Zealand’s economy. The Reserve Bank of New Zealand’s (RBNZ) quarterly Inflation Expectations Survey showed that market participants continue to see inflation stabilizing around 2.28% for the fourth quarter — comfortably within the central bank’s 1%–3% target range. While the reading suggests that inflation pressures are gradually easing, it also reinforces expectations that the RBNZ may soon have room to begin cutting interest rates to support the slowing economy. The survey revealed that most respondents anticipate a rate cut at the central bank’s upcoming policy meeting later this month. Markets are currently pricing in a 25-basis-point reduction to 2.25%, with a smaller 10% probability of a 50-basis-point cut, as policymakers face growing signs of economic strain. Rising job losses, subdued business confidence, and weak consumer spending have all heightened concerns that New Zealand may be on the brink of a second technical recession in less than two years. Despite these headwinds, the NZD has shown some resilience, supported by expectations that monetary easing could help stabilize growth in 2025. However, the currency remains vulnerable to fluctuations in global risk sentiment and the performance of key commodities, particularly dairy — New Zealand’s largest export sector. Meanwhile, the U.S. Dollar remains firm, supported by steady Treasury yields and cautious investor sentiment ahead of this week’s U.S. inflation data. Any upside surprise in U.S. consumer prices could strengthen the greenback further, limiting near-term gains for the kiwi. From a technical perspective, support for NZD/USD lies near US$0.5600, while resistance is seen around US$0.5680. A sustained move above that level could open the door toward US$0.5720, though momentum appears muted as traders await clearer policy signals from the RBNZ. In the near term, the kiwi’s direction will likely depend on evolving expectations for interest rates and economic recovery prospects. While sentiment remains cautious, a balanced policy response from the RBNZ could help steady the New Zealand Dollar in the months ahead.Key Movers
The EUR/USD pair continued its upward momentum on Tuesday, edging closer to the 1.1600 level during early U.S. trading hours. The euro’s advance comes as the U.S. Dollar (USD) trades with a softer tone against most major currencies, supported by renewed optimism that the U.S. government shutdown may soon come to an end. Investor sentiment improved after the U.S. Senate passed a long-awaited funding bill in a 60–40 vote late Monday, with eight Democrats joining Republicans to push the measure forward. The bill’s approval effectively brings an end to the 41-day partial government shutdown, though it now moves to the House of Representatives for final confirmation. The progress helped ease market anxiety, boosting risk appetite and weighing on demand for the safe-haven dollar. Meanwhile, in Europe, the latest ZEW Economic Sentiment Survey painted a mixed picture for the region’s largest economy. The German Economic Sentiment Index declined slightly to 38.5 in November, down from 39.3 in October, suggesting that investors remain cautious about the near-term outlook. However, the assessment of current conditions showed a modest improvement, rising to -78.7 from -80, hinting that the worst of the slowdown may be behind. Encouragingly, the broader EU Economic Sentiment Index climbed to 25.0 from 22.7, signaling growing optimism about the eurozone’s recovery prospects heading into the end of the year. Analysts note that easing inflation pressures, steady employment, and improving credit conditions are helping support sentiment, even as growth remains moderate. From a technical perspective, EUR/USD faces initial resistance around the 1.1600 psychological level. A sustained break above this mark could open the door toward 1.1640, while support is seen near 1.1550. Momentum remains constructive, supported by a weaker U.S. Dollar and improving investor confidence in the eurozone. Looking ahead, traders will turn their focus to upcoming U.S. inflation data and speeches from Federal Reserve officials for clues on the future direction of monetary policy. For now, easing political uncertainty in Washington and mildly upbeat European data appear to be providing a tailwind for the euro, helping it extend its weekly gains against the dollar.Expected Ranges
- NZD/USD: 0.5550 - 0.5750 ▲
- NZD/EUR: 0.4800 - 0.5000 ▲
- GBP/NZD: 2.3200 - 2.3400 ▼
- NZD/AUD: 1.1450 - 1.1650 ▼
- NZD/CAD: 0.7800 - 0.8000 ▼