New Zealand Dollar hangs near November 2025 lows vs bullish USD as traders await US PCE
- NZD/USD remains under some selling pressure for the seventh straight day on Thursday.
- The Fed’s rate hike signal continues to underpin the USD, exerting pressure on the pair.
- A more hawkish RBNZ helps limit losses as traders turn cautious ahead of the US PCE.
The NZD/USD pair attracts sellers for the seventh straight day and drifts back closer to its lowest level since November 25, set the previous day. Spot prices currently trade around the 0.5640-0.5635 region and seem vulnerable amid a bullish US Dollar (USD).
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, shot to a fresh high since May 2025 on Wednesday in the wake of the US Federal Reserve's (Fed) hawkish pivot last week. Moreover, nine of the Fed's 19 committee members believed that they would need to raise the policy rate to combat sticky inflation. Adding to this, mixed US-Iran messages on nuclear inspection, along with risk aversion led by a tech-driven selloff, act as a tailwind for the safe-haven buck and continue to exert pressure on the NZD/USD pair.
Meanwhile, Oil prices fell to their lowest levels since before the US-Iran war amid the resumption of traffic through the Strait of Hormuz. Adding to this, a temporary 60-day sanctions waiver that authorizes the production, delivery, and sale of Iranian crude oil, petroleum, and petrochemical products eases supply concerns and weighs on the black liquid. This is expected to alleviate upstream pressure on consumer inflation, forcing investors to trim Fed rate-hike expectations, which might hold back the USD bulls from placing fresh bets.
Market participants might also opt to move to the sidelines ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index, due later during the North American session. Apart from this, the Reserve Bank of New Zealand's (RBNZ) hawkish shift could support the New Zealand Dollar (NZD) and limit losses for the NZD/USD pair. In fact, the RBNZ indicated that the OCR could reach roughly 2.85% by the end of this year, implying up to three rate hikes. This, in turn, warrants some caution before positioning for further losses.
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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