NZD/USD extends the decline to near 0.5950, all eyes on Fed rate decision

NZD/USD weakens to around 0.5955 in Wednesday’s early Asian session.
The US Fed is unlikely to cut rates at its July meeting on Wednesday.
Trade optimism and the potential extension of the US-China trade truce might help limit the NZD’s losses.

Lallalit Srijandorn FXStreet

The NZD/USD pair extends its downside to around 0.5955 during the early Asian session on Wednesday. Uncertainty surrounding the United States (US) and China tariff truce continues to undermine the China-proxy Kiwi. Investors will closely monitor the US Federal Reserve (Fed) interest rate decision later on Wednesday, with no change in rates expected.

Analysts expect the US Fed will leave interest rates unchanged at 4.25% to 4.50% at the end of its two-day monetary policy meeting on Wednesday. Traders are now pricing in nearly a 97% odds of no change to interest rates at the July meeting, according to the CME FedWatch tool.

Fed members remain cautious about the potential inflationary impact of US President Donald Trump’s aggressive new tariff policy. Traders will keep an eye on the Fed Chair Jerome Powell's Press Conference after the policy meeting. A more hawkish-than-expected outcome from the meeting could boost the Greenback and act as a headwind for the pair.

The attention will shift to the US employment data for July, which is due later on Friday. The US economy is projected to add 110K jobs in July, while the Unemployment Rate is estimated to tick higher to 4.2% in July from 4.1% in June.

US Treasury Secretary Scott Bessent said that the US and China will continue talks over maintaining a tariff truce before the deadline in two weeks, and Trump will make the final decision on any extension. Bessent tamped down any expectation of Trump rejecting the extension. Trade optimism and a possible extension of the US-China trade truce could provide some support to the China-proxy New Zealand Dollar (NZD) in the near term, as China is a major trading partner of New Zealand.

New Zealand Dollar FAQs

What key factors drive the New Zealand Dollar?

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.

How do decisions of the RBNZ impact the New Zealand Dollar?

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.

How does economic data influence the value of the New Zealand Dollar?

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.

How does broader risk sentiment impact the New Zealand Dollar?

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.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD hovers around daily lows near 1.3450

GBP/USD trades with decent losses on Thursday, revisiting the 1.3450 zone. Cable’s resumption of the selling interest comes after two daily advances in a row and follows the improved sentiment around the Greenback amid fresh concerns in the Middle East.

Euro weakens against US Dollar amid Middle East tensions

EUR/USD faces some renewed downside pressure and retests the low 1.1500s in the latter part of Thursday’s NA session. The move lower in spot comes after two daily advances in a row and follows the fresh bid bias in the US Dollar amid the re-emergence of some effervescence in the Middle East. Moving forward, US NFP data will take centre stage on Friday.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

Ethereum Price Forecast: Whales absorb retail distribution as bear market nears late stage

Ethereum (ETH) large holders have been accumulating the supply of retail investors in 2026. In a report released late Wednesday, CryptoQuant analysts highlighted that the supply of the 1K-10K ETH cohort has fallen from 15.6 million ETH in January to roughly 12.9 million ETH.

Markets question Fed's inflation resolve after July FOMC meeting

Federal Reserve Chairman Kevin Warsh continues to project a tough stance on inflation, repeatedly promising to restore price stability and keep inflation anchored at the central bank's longstanding 2% target. But according to Mike Maharrey in this week's Money Metals Midweek Memo, markets are beginning to judge the Fed by its actions rather than its rhetoric—and so far, they aren't convinced.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.