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NZD/USD edges lower on conflicting NZ labor data, US rate cut bets

  • NZD/USD edges lower as the latest data from New Zealand send conflicting signals on the labor market.
  • Markets push expectations of monetary tightening in New Zealand back toward the end of the year.
  • The US Dollar remains under pressure, weighed down by employment concerns and rising expectations of rate cuts.

NZD/USD corrects by 0.15% on Tuesday and trades around 0.6050 at the time of writing, as investors digest mixed macroeconomic signals from New Zealand while remaining focused on shifts in US monetary policy expectations.

In New Zealand, the latest economic figures paint a mixed picture of the economic outlook. The Unemployment Rate rises to its highest level in a decade, pointing to some cooling in the labor market. At the same time, employment growth surprises to the upside, exceeding expectations and suggesting that economic activity retains a degree of resilience. This combination nevertheless reinforces the view that a near-term rate hike by the Reserve Bank of New Zealand (RBNZ) remains unlikely. Despite inflation still running above the central bank’s target, policymakers are expected to favor patience before considering further tightening.

Money markets are now fully pricing in a rate increase only from October, with a still-significant probability of action as early as September. The next RBNZ policy meeting, scheduled for February 18 and marking the first under the leadership of new Governor Anna Breman, is widely expected to result in rates being left unchanged, alongside updated economic and interest rate projections.

On the US side, the US Dollar (USD) continues to trade in a fragile environment, with concerns about job creation returning to the forefront. Comments from White House adviser Kevin Hassett, suggesting weaker demand for labor in the coming months, have weighed on expectations for the next employment release and strengthened bets on Federal Reserve (Fed) rate cuts in the months ahead. Futures markets are pricing a 17% chance of a rate cut in March and 34% in April, while the chance of easing in June is close to 75%, according to the CME FedWatch tool.

Recent remarks from Fed officials also highlight divisions within the central bank. Governor Stephen Miran played down the inflationary impact of tariffs and reiterated his call for more rate cuts, while Atlanta Fed President Raphael Bostic pointed to choppy employment data and warned about confidence issues surrounding the US Dollar.

Investors’ attention now turns to US Retail Sales, expected to rise by 0.4% in December after a 0.6% increase in November. Excluding automobiles, sales are also forecast to slow to 0.3% from 0.5% previously, a development that could influence the near-term direction of the US Dollar and, by extension, the NZD/USD pair.

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 Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.06%0.24%-0.42%0.03%0.27%0.18%-0.03%
EUR-0.06%0.17%-0.50%-0.03%0.21%0.12%-0.10%
GBP-0.24%-0.17%-0.68%-0.20%0.03%-0.06%-0.27%
JPY0.42%0.50%0.68%0.47%0.71%0.61%0.40%
CAD-0.03%0.03%0.20%-0.47%0.24%0.15%-0.06%
AUD-0.27%-0.21%-0.03%-0.71%-0.24%-0.09%-0.30%
NZD-0.18%-0.12%0.06%-0.61%-0.15%0.09%-0.21%
CHF0.03%0.10%0.27%-0.40%0.06%0.30%0.21%

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).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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