New Zealand Dollar Slumps Nearly 0.8% as Risk-Off Sentiment Resurfaces
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Daily Currency Update
The NZD/USD declined by about 0.78%, making it one of the weaker G10 currencies during this period. After pushing to a two-week high midweek—around 0.6030—the Kiwi reversed sharply as the U.S. dollar firmed amid resilient U.S. labor data and rising expectation that the Federal Reserve will keep rates on hold into the fall. On Friday (July 25), the pair closed near 0.6013, down roughly 0.35% from the previous session. The decline reflected growing speculation that the Reserve Bank of New Zealand may cut interest rates, following dovish commentary on trade headwinds and subdued inflation trends. RBNZ officials highlighted that tariffs pose a “negative demand shock,” paving the way for potential easing should growth and price pressures soften further. This week, the New Zealand dollar (NZD) is likely to remain under pressure as markets continue to price in the increasing likelihood of a Reserve Bank of New Zealand (RBNZ) rate cut. Traders are closely watching upcoming domestic data releases—particularly trade balance and business confidence figures—for signs of further economic softening that could validate dovish policy expectations. The NZD will also be sensitive to global developments, especially the outcomes of the U.S. Federal Reserve and Bank of Japan meetings. Any hawkish tilt from the Fed could strengthen the U.S. dollar further and weigh on NZD/USD. Technically, the Kiwi is hovering near key support at 0.6000, and a decisive break below that level could open the door toward 0.5950. On the upside, any recovery would likely face resistance near 0.6060. Overall, sentiment around the NZD remains cautious, with downside risks prevailing unless global risk appetite improves or domestic data surprises to the upside.Key Movers
Last week, the U.S. Dollar Index (DXY)—which tracks the dollar versus six major currencies—rose by approximately 0.72%, climbing from around 97.85 to around 98.57 by mid‑week before settling near 97.67 on Friday, reflecting a steady and cautious rebound in the greenback. The gain was driven by surprisingly strong U.S. data—namely retail sales outperforming expectations and unemployment claims falling to a three-month low—reducing market expectations for immediate Federal Reserve rate cuts and supporting USD demand. Meanwhile, optimism around U.S. trade negotiations—especially progress with the EU and Japan—helped boost risk appetite globally, which in turn weighed on the dollar compared with risk-sensitive currencies such as the euro, yen, and antipodeans. Overall, the dollar posted a modest weekly gain, reversing earlier weakness and positioning itself as a beneficiary of resilient U.S. fundamentals and cautious Fed expectations. Looking ahead this week and much hinges on this week’s pivotal Federal Reserve policy meeting, where rates are expected to be left unchanged. But all eyes are on Chair Jerome Powell’s comments, particularly any signals of timeline shift for future rate cuts. Renewed political pressure—especially from the White House calling for “dramatically lower” rates—adds to uncertainty about the Fed’s independence and could weigh on dollar sentiment. Beyond central bank developments, markets are assessing tariff risks, evolving U.S.–Japan trade negotiations, and ongoing fiscal concerns—including widening U.S. deficits and rising debt levels, which may further undermine investor confidence in the dollar.Expected Ranges
- NZD/USD: 0.5900 - 0.6100 ▼
- NZD/EUR: 0.5000 - 0.5200 ▼
- GBP/NZD: 2.2150 - 2.2350 ▲
- NZD/AUD: 1.0800 - 1.1000 ▼
- NZD/CAD: 0.8100 - 0.8300 ▲