New Zealand dollar steadies as markets brace for key fed decision
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Daily Currency Update
The New Zealand dollar is holding its ground, trading near US$0.5734 at the time of writing, as global currency markets shift their attention to next week’s highly anticipated US Federal Reserve meeting. With expectations building for another interest rate cut from the Fed, the US dollar has weakened slightly, offering the New Zealand dollar some welcome support. Investors are increasingly confident that the Fed will lower rates at its final policy meeting of the year. This growing conviction has been reflected in interest rate futures, where traders now see close to an 88% chance of a quarter-percentage-point cut. Just a month ago, those odds were significantly lower at around 63%, highlighting how quickly sentiment has shifted. The prospect of cheaper borrowing costs in the United States typically weighs on the US dollar, and that pattern is once again playing out in the market. For New Zealand, the picture is a little different. The Reserve Bank of New Zealand (RBNZ) delivered a 25-basis-point cut to its official cash rate last week, bringing it down to 2.25%. While this move was widely anticipated, what really caught investors’ attention was the tone of the central bank’s message. Policymakers suggested that this may mark the end of the current easing cycle, noting that early signs of economic recovery are beginning to appear. That hint of optimism has helped underpin the New Zealand dollar, preventing it from slipping despite the more dovish stance from the Fed. This mix of global and domestic dynamics has created a relatively balanced backdrop for NZD/USD. On one hand, the US dollar is under pressure as markets brace for the possibility of more easing from the Fed. On the other, New Zealand’s central bank appears to be hitting the pause button as it waits to assess how the economy evolves over the coming months. Together, these forces are helping to steady the kiwi, keeping it supported even in the face of slower global growth. Looking ahead, traders will be watching for any new signals from the Fed next week. A cut is widely expected, but markets will be just as focused on what the central bank says about the path forward. Hints of further easing in 2026 could push the US dollar even lower, giving the New Zealand dollar additional room to rise. Conversely, if the Fed adopts a more cautious tone, the kiwi could face some headwinds. For now, though, the New Zealand dollar is managing to tread water comfortably, supported by a softer US dollar and a cautiously optimistic outlook from the RBNZ.Key Movers
The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, is holding almost perfectly steady, hovering around 99.43 despite a rise in US Treasury yields. After wavering between small gains and losses through the 99.40–99.50 range on Tuesday, the dollar managed to claw back a bit of the ground it lost earlier in the week. While the movement has been limited, the tone in markets suggests that traders are biding their time ahead of a packed US economic calendar. The stability in the dollar comes at an interesting moment, with Treasury yields ticking higher—typically a supportive factor for the currency. However, investors appear hesitant to make strong directional bets until they see how the latest round of economic indicators shapes the narrative around US growth and the Federal Reserve’s policy path. Today’s US data calendar is a busy one, giving markets plenty to digest. Things begin with the weekly Mortgage Bankers Association (MBA) mortgage applications report. Though not always a major market mover, the data can provide a useful snapshot of how higher borrowing costs are affecting housing demand. The spotlight will then shift to the ADP Employment Change report, often viewed as a preview of the all-important nonfarm payrolls data due later in the week. Strong job growth could reinforce the idea that the US labour market remains resilient, while softer numbers may add to expectations that the Fed has room to take a more cautious, potentially more dovish stance. Next up are the Export and Import Prices, key indicators that help markets gauge inflationary pressures within global trade flows. These figures can offer an early hint of how broader inflation might evolve in the months ahead, shaping expectations around interest rates. Later in the session, the ISM Services PMI will attract significant attention. As the services sector makes up the majority of US economic activity, any signs of weakness or strength can move markets quickly. A solid reading would suggest ongoing economic momentum, whereas a slowdown could raise fresh concerns about demand. Additional releases include Industrial Production, Manufacturing Production and Capacity Utilisation—three reports that together give a comprehensive view of the health of the American industrial sector. Rounding out the day, traders will also have the final S&P Global Services PMI to review, offering a second lens on service-sector performance, as well as the weekly EIA crude oil inventory report, which tends to influence energy markets but can also affect broader risk sentiment. Overall, with so many data points on deck, the US dollar is likely to see more movement as the day unfolds. For now, though, the greenback is holding its ground, steady but watchful as markets await clearer signals about the direction of the US economy.Expected Ranges
- NZD/USD: 0.5650 - 0.5850 ▲
- NZD/EUR: 0.4850 - 0.5050 ▲
- GBP/NZD: 2.2950 - 2.3150 ▼
- NZD/AUD: 1.1350 - 1.1550 ▲
- NZD/CAD: 0.7900 - 0.8100 ▲