NZD/USD declines below 0.6000 amid rising New Zealand Unemployment Rate
- NZD/USD softens to around 0.5980 in Thursday’s Asian session, down 0.36% on the day.
- The rising Unemployment Rate in New Zealand weighs on the Kiwi.
- Doubts over Fed independence are likely to persist.
The NZD/USD pair trades on a softer note near 0.5980 during the Asian trading hours on Thursday. The New Zealand Dollar (NZD) edges lower against the Greenback amid rising Unemployment Rates in New Zealand. Federal Reserve (Fed) Atlanta President Raphael Bostic is set to speak later on Thursday.
Statistics New Zealand revealed on Wednesday that the country’s Unemployment Rate climbed to 5.4% in the December 2025 quarter, up from 5.3% in the previous September quarter. This figure came in worse than the estimations of 5.3% and registered the highest jobless rate since late 2015.
The report reinforces the case for continued monetary easing from the Reserve Bank of New Zealand (RBNZ), which dragged the Kiwi lower against the US Dollar (USD). Swaps markets are now pricing in over a 60% probability of a rate reduction by the May policy meeting.
A renewed Greenback demand driven by shifting expectations for Fed policy could create a headwind for the pair. US President Donald Trump on Friday nominated Governor Kevin Warsh to serve as the next Fed Chairman. Traders anticipate a slower pace of interest rate cuts under his tenure and a focus on shrinking the Fed's balance sheet.
However, uncertainty and concerns about the Fed’s independence remain following Trump’s latest comments. Trump said earlier on Thursday that he would have passed on Kevin Warsh as his nominee to lead the Fed if Warsh had expressed a desire to hike interest rates, prt Bloomberg.
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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