NZD/USD climbs to multi-month peak as US Dollar slides on dovish Fed bets, US fiscal woes

• NZD/USD reaches its highest level since October 2024 amid sustained weakness in the US Dollar.
• Broad US Dollar weakness persists amid a dovish Fed outlook and fiscal concerns.
• Trump meets GOP leaders to push $3.3 trillion deficit bill ahead of July 4.
• NZ filled jobs rose just 0.1% in May, job market near 28-month low.

The New Zealand Dollar (NZD) extends its winning streak against the US Dollar (USD) on Monday, with the NZD/USD rising to 0.6090 -- its highest level since October 2024 -- as broad-based Greenback weakness continues to fuel gains.

The Kiwi is buoyed by broad-based USD weakness, underpinned by a more dovish Federal Reserve (Fed) outlook, mounting US fiscal concerns, and persistent trade uncertainty. Investors are now turning their focus to key US labor market data, due later this week, which may reveal signs of cooling and reinforce expectations for a Fed rate cut as early as September.

Meanwhile, the US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six major currencies, continues its descent, slipping below the 97.00 mark and trading around 97.85 at the time of writing.

In Washington, fiscal concerns remain front and center as US President Donald Trump pushes to pass a sweeping tax and spending package projected to add $3.3 trillion to the national debt. Trump is meeting with Senate Majority Leader John Thune and House Speaker Mike Johnson at the White House on Monday to secure Republican backing ahead of a targeted July 4 signing.

"We need the full weight of the Republican conference to get behind this bill -- and we expect them to," said White House Press Secretary Karoline Leavitt. The proposed package is fueling market unease over long-term US debt sustainability, reinforcing downward pressure on the US Dollar.

New Zealand's labor market showed signs of cooling, with filled jobs edging up just 0.1% to 2.35 million in May, Statistics New Zealand said Monday in Wellington. Despite the marginal monthly gain, the total number of filled jobs remains near a 28-month low, with April's revised figure marking the weakest since January 2023. The latest figures reinforce a string of weak data, ranging from contracting manufacturing activity to falling consumer spending. Economists expect the jobless rate to move higher in the second and third quarters as US President Donald Trump's unpredictable trade policies erode business confidence.

Growth forecasts for Q2 remain muted. ASB projects a 0.3% expansion, while the Reserve Bank of New Zealand's (RBNZ) GDP nowcast points to just 0.1% growth. Finance Minister Nicola Willis warned last week that tariff uncertainty and Middle East tensions have dampened business sentiment and investment, saying it will be "very challenging to sustain the previous level of growth."

Cooling demand and softer wage pressure have strengthened the case for the RBNZ easing. While several analysts expect the central bank to hold the Official Cash Rate (OCR) steady at 3.25% on July 9, markets are pricing in a 25 basis-point cut by August. Swaps data suggest a less than 40% probability of any further reductions this year.