Kiwi dollar extends gains amid softer US dollar and hawkish RBNZ signals ahead of PMI data
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Daily Currency Update
The New Zealand dollar (NZD) edged higher against the US dollar (USD) on Thursday, with NZD/USD advancing for a second consecutive session as the Greenback weakened in the wake of the latest US inflation report. At the time of writing, the pair is trading around 0.5973, its highest level since August 14, marking a daily gain of approximately 0.50%. On the domestic front, the Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby commented earlier this week that the New Zealand economy had “stalled” around the middle of the year. However, he noted that inflation has now returned to the central bank’s target range of 1–3%. Hawkesby indicated that the Official Cash Rate (OCR) could decline toward 2.50% by the end of the year, though emphasised the pace of easing will depend on the strength of the economic recovery. He also acknowledged the RBNZ is facing a “test of trust and confidence” following recent leadership changes, but reaffirmed the central bank’s commitment to maintaining low and stable inflation. Looking ahead, market participants are awaiting the release of the Business NZ Manufacturing PMI for August, due later on Thursday. The July reading rose sharply to 52.8 from 49.2, returning to expansion territory for the first time in three months. A weaker print could put pressure on the Kiwi, while a solid result may reinforce recent gains.Key Movers
At the time of writing, the US Dollar Index (DXY), which measures the value of the US dollar against a basket of six major currencies, is trading near a three-day high around the 98.00 level. The recent strength in the dollar reflects cautious optimism among investors ahead of the latest Consumer Price Index (CPI) report, which could offer fresh clues about inflation trends and the broader US economic outlook. Markets are closely watching the data to assess whether President Donald Trump’s trade tariffs are contributing to sustained inflationary pressure. So far, most members of the Federal Open Market Committee (FOMC), including Chair Jerome Powell, have indicated the inflation caused by tariffs appears to be temporary and not a lasting concern. Economists expect the headline CPI to have increased by 2.9% year-over-year in August, up from 2.7% in July, suggesting inflation is picking up. Meanwhile, the core CPI, which excludes the more volatile food and energy components, is projected to have risen 3.1% annually, unchanged from the previous month. On a monthly basis, both the headline and core CPI figures are expected to show a moderate gain of 0.3%. These numbers will be critical in shaping expectations for future Federal Reserve policy moves. A stronger-than-expected inflation print could reinforce the case for keeping interest rates higher for longer, potentially boosting the US dollar further. Conversely, a weaker reading may revive bets on earlier rate cuts.Expected Ranges
- NZD/USD: 0.5850 - 0.6050 ▲
- NZD/EUR: 0.5000 - 0.5200 ▲
- GBP/NZD: 2.2650 - 2.2850 ▼
- NZD/AUD: 1.1100 - 1.1300 ▼
- NZD/CAD: 0.8150 - 0.8350 ▲