New Zealand Dollar remains weak below 0.5750 despite better-than-expected GDP data
- NZD/USD slumps to around 0.5725 in Thursday’s early Asian session.
- New Zealand’s economy grew by 0.2% QoQ in Q2, better than expected.
- Fed’s Warsh said inflation is still too high as the central bank hikes for the first time since 2023.
The NZD/USD pair falls to near 0.5725 during the early Asian session on Thursday. The New Zealand Dollar (NZD) remains under selling pressure against the US Dollar (USD) despite the upbeat New Zealand economic data. The US Initial Jobless Claims data is due later on Thursday.
Data released by Statistics New Zealand on Thursday showed that the country’s Gross Domestic Product (GDP) grew by 0.2% QoQ in the second quarter (Q2) of 2026. This figure followed a 0.9% expansion in Q1 and came in stronger than the expected 0.1% rise. On an annual basis, the New Zealand economy expanded by 2.6% in Q2, versus 1.7% in Q1, beating the estimation of a 2.3% growth.
"The 0.2 percent growth in economic activity in the June 2026 quarter reflects mixed results, with increases in nine out of 16 industries," said Statistics New Zealand spokesperson Jason Attewell.
Despite the stronger-than-expected GDP report, New Zealand's economy grew more slowly in the second quarter as the crisis in the Middle East weighed on the economy. The New Zealand Dollar (NZD) remains under selling pressure in an immediate reaction to the GDP growth data.
As widely expected, the US Federal Reserve (Fed) decided to raise its benchmark interest rate on Wednesday, bringing the benchmark interest rate by 25 basis points (bps) to the target range of 3.75% to 4.00%. This is the first rate hike since 2023.
Fed Chairman Kevin Warsh said during the press conference that neither he nor his fellow policymakers are happy with the current pace of inflation. “Our predominant focus is on the price stability side of our mandate,” said Warsh. “The plain fact is that inflation is too high and has been for too long,” he added.
The Fed rate hike and Warsh’s remarks about a commitment to fighting inflation could provide some support to the Greenback and act as a headwind for the pair in the near term.
Kiwi under pressure as RBNZ’s dovish surprise collides with fragile risk sentiment
Analysts at ING highlight that the Reserve Bank of New Zealand delivered a “dovish surprise” at its September meeting, signalling “there is only room for another 25bp to 3.0%.” They caution that this “should not be taken as a commitment,” stressing that “the longer energy prices remain elevated, the higher the chances of upward revisions in policy projections by year-end.”
On the currency side, ING reiterates that “NZD/USD remains primarily driven by global risk sentiment and US events.” The bank sees scope for further weakness, arguing that “the decline has a bit further to go on a Fed hike and risk assets' fragility.” For now, however, ING still identifies “0.570 as a bottom,” with “room to bounce back towards 0.59 as early as year-end on some dovish Fed repricing.”
Technical Analysis: NZD/USD keeps a bearish vibe amid oversold RSI
In the daily chart, NZD/USD retains a bearish near-term bias as spot holds below the 100-day moving average (MA) and the 20-period Bollinger middle band, keeping the broader downside structure intact. Price is also trading beneath the lower Bollinger band, underscoring persistent selling pressure, while the Relative Strength Index (14) hovering near 29 suggests oversold conditions that could slow—but not yet reverse—the current decline.
On the topside, initial resistance is aligned with the lower Bollinger band at about 0.5735, followed by the 100-day MA around 0.5840 and the Bollinger midline near 0.5875, with the upper band up in the 0.6020 area acting as a more distant cap. With no clear support levels derived from the current indicator set below market, further weakness would leave the pair vulnerable to fresh lows unless buyers can reclaim at least the 0.5735–0.5835 band to ease immediate downside pressure.
(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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