NZD/USD corrects below 0.6000 ahead of Fed’s monetary policy decision
- NZD/USD slides below 0.6000 as the New Zealand Dollar weakens ahead of the Fed’s interest rate decision.
- Hopes of de-escalation in the US-China trade war and soft NZ Q1 Labor Cost Index data weigh on the Kiwi Dollar.
- The Fed is widely anticipated to keep interest rates steady.
The NZD/USD pair retraces to near 0.5980 during North American trading hours on Wednesday after revisiting the six-month high of 0.6025 earlier in the day. The Kiwi pair faces pressure as the New Zealand Dollar (NZD) weakens after investors buy the rumour and sell the news of trade discussions between the United States (US) and China.
New Zealand Dollar PRICE Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | -0.05% | 0.60% | 0.09% | 0.40% | 0.39% | -0.20% | |
| EUR | -0.02% | -0.08% | 0.60% | 0.06% | 0.38% | 0.36% | -0.22% | |
| GBP | 0.05% | 0.08% | 0.63% | 0.16% | 0.45% | 0.43% | -0.15% | |
| JPY | -0.60% | -0.60% | -0.63% | -0.52% | -0.21% | -0.17% | -0.77% | |
| CAD | -0.09% | -0.06% | -0.16% | 0.52% | 0.32% | 0.30% | -0.29% | |
| AUD | -0.40% | -0.38% | -0.45% | 0.21% | -0.32% | -0.01% | -0.62% | |
| NZD | -0.39% | -0.36% | -0.43% | 0.17% | -0.30% | 0.01% | -0.59% | |
| CHF | 0.20% | 0.22% | 0.15% | 0.77% | 0.29% | 0.62% | 0.59% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
On Tuesday, both Washington and Beijing agreed to a meeting this week in Switzerland. However, the meeting between both nations is expected to be an initial move to de-escalation in the month-long trade war and not any constructive step towards trade negotiations. “My sense is that this will be about de-escalation, not about the big trade deal,” US Treasury Secretary Scott Bessent said, according to CNBC.
Additionally, mixed signals from the New Zealand Q1 employment data have also weighed on the Kiwi Dollar. The data showed earlier that the Employment Change grew by 0.1%, as expected, after declining by 0.2% in the last quarter of 2024. The Unemployment Rate remained steady at 5.1%, while investors expected the jobless rate to have accelerated to 5.3%. Labor Cost Index grew at a slower-than-expected pace on both a monthly and yearly basis.
Soft labor cost data boost expectations that the Reserve Bank of New Zealand (RBNZ) will reduce interest rates in the policy meeting later this month.
Meanwhile, the US Dollar (USD) flattens ahead of the Federal Reserve’s (Fed) monetary policy meeting, which will be announced at 18:00 GMT. According to the CME FedWatch tool, the Fed is almost certain to keep borrowing rates steady in the range of 4.25%-4.50%. This would be the third straight policy meeting in which the Fed will leave interest rates unchanged.
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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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
