Select Language

NZD/USD moves above 0.6000 despite NZIER's recommendation for a rate cut

Breaking news

NZD/USD moves above 0.6000 despite NZIER's recommendation for a rate cut

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.05.26 13:47
NZD/USD moves above 0.6000 despite NZIER's recommendation for a rate cut

update 2025.05.26 13:47

  • NZD/USD appreciates as the US Dollar extends its losses amid growing US-debt concerns.
  • The US deficit could increase by $3.8 billion if Trump's "One Big Beautiful Bill" passes through the Senate floor.
  • NZIER's half of the members suggested that the RBNZ should deliver a 25 basis-point rate cut on Wednesday.

NZD/USD hits fresh six-month highs, with trading around 0.6030 during the Asian hours on Monday. The pair continues its winning streak for the second successive day as the US Dollar remains under downward pressure amid rising United States (US)-debt concerns.

The US fiscal deficit could increase further when Trump's "One Big Beautiful Bill" passes through the Senate floor. The Congressional Budget Office (CBO) noted that the bill is expected to increase the deficit by $3.8 billion, as it would deliver tax breaks on tip income and US-manufactured car loans.

Moreover, Trump's bill may increase the risk of bond yields staying higher for longer. Higher bond yields can keep borrowing costs higher for consumers, businesses, and governments, which increases uncertainty surrounding the United States (US) economy.

Half of the members of the 'Shadow Board", the New Zealand Institute of Economic Research (NZIER), suggested that the Reserve Bank of New Zealand (RBNZ) should deliver a 25 basis-point Official Cash Rate (OCR) cut in the upcoming Monetary Policy Statement on Wednesday. One member recommended a 50 basis-point cut, while several members suggested that the central bank keep the OCR unchanged in May.

The RBNZ is widely anticipated to lower the Official Cash Rate by 25 basis points as inflation remains low, while growth remains a major concern. Markets expect the RBA interest rate to fall to around 3.0% or 2.75% by the end of the year.

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.


Date

Created

 : 2025.05.26

Update

Last updated

 : 2025.05.26

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

G7 statement says Iran can never have a nuclear weapon - AFP

G7 leaders attending a summit in Canada issue a joint statement calling for "de-escalation" on Iran. The G7 statement said that members have been consistently clear that Iran can never have a nuclear weapon.
New
update2025.06.17 13:02

AUD/JPY pares gains near 94.50 as BOJ holds rates steady

The AUD/JPY cross trims gains near 94.50 during the Asian trading hours on Tuesday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) after the Bank of Japan (BoJ) interest rate decision. Investors will closely monitor the BoJ Press Conference later on Tuesday. 
New
update2025.06.17 12:55

EUR/JPY holds position near 167.50 after BoJ interest rate decision

EUR/JPY continues its winning streak that began on June 5, trading around 167.40 during the Asian hours on Tuesday. The pair has marked 167.59, the highest since July 2024.
New
update2025.06.17 12:46

NZD/USD remains steady near 0.6050 following Food Price Index data

NZD/USD extends its gains for the second successive session, trading around 0.6060 during the Asian hours on Tuesday. However, the pair moved little after the Food Price Index data was released by Statistics New Zealand.
New
update2025.06.17 11:53

Japanese Yen struggles to lure buyers; looks to BoJ policy update for fresh impetus

The Japanese Yen (JPY) remains on the back foot against its American counterpart for the third consecutive day on Tuesday amid expectations that the Bank of Japan (BoJ) could postpone the rate hike to Q1 next year due to uncertainty over US tariff policy.
New
update2025.06.17 11:17

Australian Dollar weakens due to market caution amid ongoing geopolitical tensions

The Australian Dollar (AUD) declines against the US Dollar (USD) on Tuesday, retracing its recent gains registered in the previous session. The AUD/USD pair faces challenges as traders adopt caution amid ongoing geopolitical tensions.
New
update2025.06.17 11:13

WTI extends upside above $70.50 ahead of US Retail Sales release

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $70.60 during the Asian trading hours on Tuesday. The WTI price edges higher amid persistent geopolitical risk in the Middle East.
New
update2025.06.17 10:47

Japan's Kato says no plan for talks with US Treasury Secretary Bessent at present

Japanese Finance Minister Katsunobu Kato said on Tuesday that he has no fixed plan right now to hold further talks with US Treasury Secretary Bessent.
New
update2025.06.17 10:22

PBOC sets USD/CNY reference rate at 7.1746 vs. 7.1789 previous

The People's Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead on Tuesday at 7.1746 as compared to the previous day's fix of 7.1789 and 7.1820 Reuters estimate.
New
update2025.06.17 10:15

US and Japan fail to reach trade deal at G-7 summit

US President Donald Trump and Japanese Prime Minister Shigeru Ishiba failed to reach a trade agreement on the sidelines of the Group of Seven summit, per Bloomberg.
New
update2025.06.17 09:55

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel