Home Daily Commentaries Weaker USD helps NZD stave off decline suffered in a wake of softer inflation print

Weaker USD helps NZD stave off decline suffered in a wake of softer inflation print

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.

| Tuesday 22 July, 2025

Daily Currency Update

The New Zealand dollar enjoyed mixed fortunes through trade on Monday, closing higher against the USD, while giving up ground to the yen and drifting sideways against most other major crosses. The NZD was forced onto the back foot during the domestic session after softer-than-expected Q2 CPI data drove the NZD toward intraday lows near US$0.5940.

Headline inflation increased 0.5% through the 2nd quarter, lifting the annual rate of inflation to 2.7% well below consensus estimates. With core measures printing largely benign, increases in the data provided added support behind calls for a renewal in the RBA’s easing cycle, cutting demand for the NZD. The downturn didn't hold, though, and broader US dollar weakness allowed the NZD to recoup losses and trade back above US$0.5980 overnight. The NZD slid below 88 against the yen as the currency strengthened following the weekends' general election.

With little of note on the macroeconomic calendar, direction will stem from ongoing US trade and tariff headlines and the undercurrent of risk demand.

Key Movers

The US dollar underperformed Monday, losing ground against most majors. The dollar index fell 0.5% lead by an advancing yen. The yen was the day’s clear top performer as markets reacted to the weekends' general election result. While the ruling coalition lost its majority in both houses of parliament, Prime Minister Ishiba announced he had no intention of stepping down at this time. The comments suggest some stability in fiscal policy and fuel hopes a trade deal can be reached with the US before the fast approaching August 1 deadline.

The yen recovered losses suffered in the lead up to the election, where markets fearful of increased spending and tax cuts forced the currency lower. In other news, the euro is 0.5% stronger, trading back near 1.17 at 1.1690, while the pound closed higher on the day as well. With little of note on the macroeconomic ticket, direction through the week will likely stem from fluctuations in the risk narrative. US trade policy and the looming August 1 tariff deadline continue to dominate sentiment.

Expected Ranges

  • NZD/USD: 0.5920 - 0.6020 ▲
  • NZD/EUR: 0.5080 - 0.5150 ▼
  • GBP/NZD: 2.2400 - 2.2700 ▲
  • NZD/AUD: 0.9080 - 0.9200 ▼
  • NZD/CAD: 0.8100 - 0.8200 ▼

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.

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