New Zealand Dollar eases from two-week high as RBNZ flags growth risks, Trump-Fed meeting eyed

• NZD/USD retreats from two-week high, snaps a two-day winning streak as US Dollar steadies.
• US Manufacturing PMI dips into contraction, while Services and Composite readings improve.
• RBNZ’s Conway warns tariffs are a “negative demand shock,” underscoring the central bank’s dovish monetary policy outlook.

The New Zealand Dollar (NZD) eases slightly against the US Dollar (USD) on Thursday, pulling back from a two-week high reached earlier in the day. The move snaps a two-day winning streak for the Kiwi as the Greenback finds stability following a volatile start to the week. Trade optimism continues to underpin broader market sentiment, limiting the downside for risk-sensitive currencies, such as the NZD.

The NZD/USD pair is ticking lower, hovering around 0.6040 at the time of writing after rising to a two-week high of 0.6059 earlier in the session. The intraday pullback reflects mild profit-taking, with gains capped by expectations of further policy easing from the Reserve Bank of New Zealand (RBNZ) amid soft inflation and global trade uncertainty.

Meanwhile, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is stabilizing near a two-week low. The US Dollar is drawing modest support from stronger-than-expected Initial Jobless Claims and a mixed set of PMI data. While the manufacturing sector slipped deeper into contraction, the services sector surprised to the upside. The divergence between weak manufacturing activity and robust services growth helped lift the Composite PMI, suggesting that overall private sector activity remains on a firm footing. The data offered the US Dollar some near-term relief following a turbulent week, though policy and political uncertainty continue to cap gains.

At the time of writing, the index is consolidating around 97.30 as investors brace for heightened political drama ahead of US President Donald Trump’s scheduled visit to the Federal Reserve (Fed) at 20:00 GMT. The visit comes as the Fed enters its blackout period ahead of next week’s policy decision, intensifying concerns over political interference and the central bank’s independence.

Back in New Zealand, RBNZ Chief Economist Paul Conway delivered a cautious yet forward-leaning assessment of the country’s economic outlook in a speech on Thursday, highlighting that global trade tensions, particularly US tariffs, pose a downside risk to New Zealand’s inflation and growth trajectory. Conway noted that while some might expect tariffs to stoke inflation, in New Zealand’s case, they are more likely to act as a “negative demand shock” that softens price pressure. “In contrast to the US, where tariffs might temporarily lift prices, here in New Zealand, the more dominant effect is a weakening of global demand and lower import costs,” he said, adding that “this combination points to reduced medium-term inflation risks.”

Conway also highlighted that ongoing trade uncertainty is “weighing heavily on business investment decisions and household spending intentions,” creating domestic headwinds. He reaffirmed the RBNZ’s readiness to ease policy further if inflation trends lower, stating the central bank has “ample room to cut the Official Cash Rate should conditions warrant it.”

While inflation remains within the 1%-3% target band, Conway cautioned that “the economy is likely to operate below potential through mid-2026” unless global conditions improve. His remarks reinforce the RBNZ’s dovish bias with trade-driven disinflation and economic slack likely to keep further rate cuts on the table.