New Zealand Dollar gains as US Dollar declines on easing Fed rate hike bets
- NZD/USD rises as NY Fed President Williams signaled no urgency for an immediate October rate hike.
- Fed’s Williams signaled no urgency for an October rate hike, though one further increase this year remains possible.
- Stronger Chinese trade-partner data boosted the New Zealand Dollar.
NZD/USD gains ground after registering losses in the previous day, trading around 0.5650 during the European hours on Wednesday. The pair gains upward momentum as the US Dollar (USD) weakens following dovish remarks from Federal Reserve Bank of New York President John Williams.
Fed’s Williams noted that following the September rate hike, there was "no need for urgency" regarding further monetary tightening, though one additional rate increase later in the year could remain appropriate if the economy evolves as forecasted. His comments effectively pushed back against expectations of an imminent October rate hike, prompting markets to reprice their forecasts.
According to the CME FedWatch Tool, the probability of an October rate increase dropped sharply to roughly 45%, down from 70.9% just a day earlier. Investors are now turning their attention to Friday’s US Nonfarm Payrolls report, where economists anticipate an addition of 90,000 jobs in September and the unemployment rate to hold steady at 4.1%.
Meanwhile, the New Zealand Dollar (NZD) finds strong support from encouraging economic data released by China, New Zealand’s primary trading partner. Official figures from China’s National Bureau of Statistics (NBS) showed the Manufacturing PMI creeping back into expansion territory at 50.1 in September, up from 49.8 in August and matching market estimates. The NBS Non-Manufacturing PMI also rebounded significantly, rising to 50.2 from 49.0 in August to beat the 49.3 consensus forecast.
Broad-based economic recovery in China was further supported by private sector surveys, with the RatingDog Manufacturing PMI climbing to 52.1 and the Services PMI edging up to 51.6, both outperforming prior readings and expectations, highlighting steady overall momentum across Chinese industry and service sectors.
Technical Analysis:
In the daily chart, NZD/USD trades at 0.5650, extending its decline below the short- and medium-term trend measures and keeping a bearish near-term bias in place. The pair sits under the nine- and 50-period Exponential Moving Averages (EMAs), suggesting rallies are likely to be capped while the broader downtrend persists. The 14-day Relative Strength Index (RSI) near 29 hovers in oversold territory, hinting that while downside pressure remains, the pace of the fall could moderate if selling fatigue emerges.
On the topside, immediate resistance appears at the nine-period EMA around 0.5682, where any rebound would first be tested, followed by a more notable barrier at the 50-period EMA near 0.5792, which reinforces the broader bearish structure. With no clear technical support derived from the available indicators below the current price, traders may look to prior swing lows and psychological handles for potential demand zones, while the pair remains vulnerable to further weakness as long as it trades beneath the clustered EMAs.
(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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