New Zealand Dollar gains momentum to near 0.5900, US NFP data looms
- NZD/USD gains ground to around 0.5895 in Friday’s Asian session.
- Fed's Waller said open to holding rates if August inflation shows progress.
- RBNZ’s Silk said the central bank is more likely to wait until December before raising interest rates again.
The NZD/USD pair gathers strength to near 0.5895 during the Asian trading hours on Friday. The US Dollar (USD) softens against the New Zealand Dollar (NZD) following Federal Reserve (Fed) Governor Christopher Waller’s remarks. Traders brace for the US August employment report later on Friday.
Waller said on Thursday that he is leaning toward keeping interest rates steady at the Fed’s September meeting, provided there are no surprises from upcoming inflation data. Traders trimmed bets on a US rate hike at this month's meeting after Waller’s speech, weighing on the Greenback.
Markets are now pricing in nearly 50.2% odds of a quarter-point hike in September, down from 63.2% on Wednesday, according to the CME’s FedWatch tool.
On the other hand, the Reserve Bank of New Zealand's (RBNZ) dovish hike could undermine the Kiwi. The RBNZ decided to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 2.75% on Wednesday, as was widely expected. RBNZ Governor Anna Breman stated that it’s likely there will be a further increase, but policymakers want to take time to assess the impact of the increases to date.
RBNZ Assistant Governor Karen Silk said on Friday that the central bank is more likely to wait until December before raising interest rates again.
Kiwi outlook stays data dependent as RBNZ keeps options open
Analysts at Commerzbank highlight that the RBNZ was careful not to lock itself into a fixed trajectory, noting that the central bank "stressed that the future rate path is not pre-determined," and instead signalled that "further tightening is possible but will depend on the persistence of inflation and the strength of the recovery." This, they argue, underscores a deliberately data-dependent stance, with policymakers keeping the door open to additional hikes while tying any move explicitly to how inflation and growth dynamics evolve.
Technical Analysis: NZD/USD
In the daily chart, NZD/USD holds a mild bullish bias as spot remains above the 100-day simple moving average (SMA) and the lower Bollinger Band, suggesting underlying demand on dips. However, price is still just under the Bollinger 20-period SMA, while the Relative Strength Index (RSI) near 51 hints at only modest positive momentum rather than an impulsive advance.
On the topside, initial resistance is the Bollinger middle band at 0.5910, with the upper band around 0.5985 acting as the next upside barrier if buyers extend the recovery. On the downside, immediate support is seen at the 100-day SMA near 0.5845, followed by the lower Bollinger Band around 0.5832, where a break would weaken the current constructive tone and expose deeper retracements.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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