Home Daily Commentaries NZD propped up by rising expectation the Fed will cut rates in September

NZD propped up by rising expectation the Fed will cut rates in September

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 14 August, 2025

Daily Currency Update

The New Zealand dollar crept back through US$0.5950 on Wednesday, buoyed by a decline in US yields and rate expectations. With little of note on the macroeconomic docket, attentions were drawn to headline news flow and comments from US Treasury Secretary Scott Bessent. Bessent called for a 50-point rate cut in September, suggesting the Federal Reserve (Fed) should reduce the federal funds rate by 175 points before the end of the year. Bessent’s comments were echoed by President Trump. The market is only pricing a 25-point cut in September and a little more than a 60-point adjustment before year-end, the comments were enough to drive the USD lower, dragged down by a correction in 2-year and 10-year yields. The NZD tested a break above US$0.5990 before fading back toward US$0.5975 and tracking between US$0.5970 and US$0.5980 through the final hours of the overnight session.

Our attentions remain with offshore macro drivers and headline news flow. Australian employment numbers, UK industrial production data, Eurozone GDP numbers and US Jobless claims dominate the docket.

Key Movers

The US dollar fell against the majority of counterparts through trade on Wednesday as US yields declined and rate cut expectations through the end of 2025 jumped higher. The White House continues to call on the Fed to aggressively cut rates, with both President Trump and Treasury Secretary Bessent suggesting a 150-point reduction in the underlying fund rate was needed. While markets and Fed officials aren’t aligned with the White House’s aggressive monetary policy, easing expectations for a 25-point cut in September have firmed, with 2-3 rate cuts expected before year-end. Both 2-year and 10-year yields fell, driving the USD lower while fostering an upswing across equities and risk assets. With the USD on the back foot, the euro pushed back above 1.17 and Sterling climbed back through 1.3550 and the yen forced the USD back below 147.50.

While headline news flow continues to dominated direction, our attentions now turn to UK industrial production data, Eurozone GDP numbers and US Jobless claims for macroeconomic guidance.

Expected Ranges

  • NZD/USD: 0.5920 - 0.6020 ▲
  • NZD/EUR: 0.5050 - 0.5150 ▲
  • GBP/NZD: 2.2550 - 2.2850 ▲
  • NZD/AUD: 0.9100 - 0.9200 ▲
  • NZD/CAD: 0.8140 - 0.8280 ▲

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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