New Zealand Dollar rises to near 0.5650 as Fed's Warsh gives no hint on October decision
- NZD/USD gains momentum to near 0.5650 in Friday’s Asian session.
- Fed's Warsh gives no hint on October policy decision.
- RBNZ’s Conway says next interest rate call ‘wide open.’
The NZD/USD pair rises to around 0.5650 during the Asian trading hours on Friday. The US Dollar (USD) faces some selling pressure against the New Zealand Dollar (NZD) following remarks from Federal Reserve (Fed) Chair Kevin Warsh.
Fed Chairman Kevin Warsh said on Friday that he does not "prejudge" interest-rate decisions, giving no preview of whether the central bank will hike or, as markets expect, hold short-term rates steady at its upcoming October 27-28 meeting.
The US Producer Price Index (PPI) rose by 6.3% year-on-year (YoY) in September, compared to a rise of 5.6% in August (revised from 5.4%), according to the Bureau of Labor Statistics on Thursday. This figure registered the largest increase since 2022 and was higher than the expectation of an increase of 5.3%.
Traders are now pricing in about a 27.7% probability of a rate hike later this month, the CME FedWatch Tool showed.
San Francisco Fed President Mary Daly and Fed Vice Chair for Supervision Michelle Bowman indicated that an immediate rate increase might not be necessary.
On the Kiwi front, Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said that the interest rate decision in late October is “wide open” even as inflation pressures build.
The RBNZ lifted its Official Cash Rate (OCR) twice in the third quarter (Q3), but surprised some in its September statement by saying it wanted to assess the impact of those back-to-back increases. This led traders to reduce the likelihood of a 25 basis point (bps) rate increase at the October policy meeting to little more than 60%.
Warsh flags investment surge and AI risks but keeps Fed options open into year-end
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful tone despite broadly steady policy messaging. The admission of being “over-scarred from the global financial crisis” underscores a cautious bias on financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” suggesting a guarded hawkish stance on output, employment, and inflation ahead of the October and December meetings. Warsh’s focus on AI as a demand-side force and on tail risks, alongside the upcoming AI field hearing, reinforces a forward-looking but non-committal posture that avoids pre-judging the policy path for the rest of 2026.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which keeps the overall policy tone firmly in hawkish territory. The combination of a stable, elevated index reading and a slightly softer FXS Speechtracker score indicates that, relative to the historical average, markets still perceive the Fed as leaning toward tighter policy even as Warsh emphasizes data dependence and risk management.
Technical Analysis: NZD/USD keeps a bearish vibe under the 100-day SMA
In the daily chart, NZD/USD holds below the 100-period moving average (MA) and the upper Bollinger Band, which keeps the pair in a capped, mildly bearish stance despite the recent bounce from oversold territory. Price trades just above the middle Bollinger Band, suggesting some near-term stabilization, while the Relative Strength Index (14) at 46.5 remains below the 50 line, hinting that recovery attempts lack strong bullish momentum for now.
On the downside, immediate support is located at the middle Bollinger Band at 0.5635, ahead of a stronger floor at the lower Bollinger Band near 0.5560. On the topside, initial resistance emerges at the upper Bollinger Band around 0.5710, with a more significant barrier at the 100-period MA at 0.5780; as long as NZD/USD remains under these levels, rallies are likely to be treated as corrective rather than the start of a sustained uptrend.
(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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