The New Zealand Dollar edges off its low as the US Dollar slips
- NZD/USD edges back above 0.5600 as the US Dollar slips, after six weekly losses.
- Odds of an RBNZ hike on October 28 near 58%, from about 80% in late September.
- The Kiwi's trade-weighted index is at a 15-year low.
Traders give the Reserve Bank of New Zealand (RBNZ) about a 58% chance of raising its Official Cash Rate (OCR) to 3% on October 28, down from about 80% in late September, and NZD/USD has fallen with those odds. The pair trades just above 0.5600, and Tuesday's high was its first above the session before since September 28.
The RBNZ's own September forecast put the OCR at an average of 2.81% for the December quarter. That figure only works with no move on October 28 and a hike in December, which is the path traders have been drifting back toward.
The weaker Kiwi is adding to the inflation the RBNZ wants to stop
BNZ estimates the Kiwi's fall adds about 0.3 percentage points to its inflation forecast on top of dearer fuel, and the currency's trade-weighted index is at a 15-year low. Dearer imports are the case for hiking sooner, and the bank now expects an October move with the OCR reaching 3.75% in time. RBNZ Governor Breman said in September that the RBNZ isn't on a preset course, and since then the exchange rate has been setting one.
New Zealand's one event on the calendar has no time attached
Governor Breman speaks on Thursday, and no time has been published for the only New Zealand event through Friday. In May she cast the deciding vote for a hold when the committee split 3-3, so any lean she shows on October carries extra weight in a close call.
Fed minutes are due on Wednesday at 18:00 GMT, jobless claims on Thursday at 12:30 GMT are forecast at 200K from 197K, and Friday brings the University of Michigan (UoM) sentiment survey at 14:00 GMT. A 3K swing in claims is unlikely to move the Kiwi as far as one sentence from Governor Breman could.
Kiwi levels near the November 2025 low
Resistance: Tuesday's bounce stopped short of 0.5650, which hasn't traded since October 1. 0.5700 is next, the level that capped the late-September bounces.
Support: Monday's low, just under 0.5600, matched the November 2025 low. 0.5550 is next, then 0.5500.
Bias: The setup stays short below 0.5650 on a closing basis, with 0.5550 the first objective and 0.5500 the second. The daily Stochastic Relative Strength Index (Stoch RSI) has been below 20 since mid-September and is near 10, so a bounce toward 0.5650 fits the call. A daily close above 0.5700 ends it.
NZD/USD daily chart
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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