NZD/USD remains below five-month highs near 0.5950, US Jobless Claims eyed
- NZD/USD edges lower as the US Dollar strengthens on the back of robust consumer spending data.
- US Retail Sales jumped 1.4% in March, surpassing both the prior month’s 0.2% rise and expectations of a 1.3% increase.
- New Zealand’s Q1 CPI came in hotter than expected, rising 2.5% YoY—above the 2.3% forecast.
NZD/USD breaks its winning streak that began on April 9, slipping to around 0.5920 during Thursday’s European session. The pair remains subdued near its five-month high of 0.5945 level as the US Dollar gains traction, supported by stronger-than-expected consumer spending data.
US Retail Sales rose 1.4% in March, exceeding both the previous month’s 0.2% increase and the market consensus of 1.3%. Investors now turn their focus to upcoming US economic data, including Building Permits, Housing Starts, the Philly Fed Manufacturing Index, and weekly Initial Jobless Claims.
The Greenback also found support from hawkish remarks by Fed Chair Jerome Powell, who reiterated the economy remains “solid” and that the Fed can afford to wait for clearer signals before shifting policy. He cited near-maximum employment and inflation slightly above the 2% target as reasons for a patient approach.
However, NZD/USD may find a floor as the Kiwi draws strength from hotter-than-expected inflation figures. New Zealand’s Q1 CPI rose 2.5% YoY, beating forecasts of 2.3% and accelerating from 2024 Q4’s 2.2%. On a quarterly basis, CPI climbed to 0.9%, also surpassing expectations of 0.7% and the previous reading of 0.5%.
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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