NZD/USD moves below 0.5650 following RBNZ Inflation Expectations

NZD/USD struggles as RBNZ's latest monetary conditions survey reveals a mixed outlook for Q1 2025 across various time frames.
NZ two-year inflation expectations declined to 2.06% in Q1 from 2.12% in Q4 2024.
Stronger-than-expected US inflation data has reduced the likelihood of a dovish Fed stance for the June policy meeting.

Akhtar Faruqui FXStreet

NZD/USD continues to decline for the second consecutive day, trading around 0.5640 during Thursday’s Asian session. The pair remains under pressure following the release of New Zealand’s (NZ) inflation expectations. The Reserve Bank of New Zealand’s (RBNZ) latest monetary conditions survey presented a mixed outlook for the first quarter of 2025 across different time frames.

NZ two-year inflation expectations, which are closely watched as they reflect the time frame when RBNZ policy actions influence prices, declined to 2.06% in Q1 from 2.12% in Q4 2024. Meanwhile, the average one-year inflation expectation rose to 2.15% in Q1 from 2.05% in the previous quarter.

The New Zealand Dollar (NZD) remains under pressure amid rising speculation of further rate cuts by the RBNZ. The central bank is set to hold its first monetary policy meeting of the year next week, following three rate cuts in 2024 that brought borrowing costs down to 4.25% in response to mild inflation.

In the United States (US), the US Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) rose 3.0% year-over-year in January, exceeding expectations of 2.9%. The core CPI, which excludes food and energy, increased to 3.3% from 3.2%, surpassing the forecast of 3.1%. On a monthly basis, headline inflation jumped to 0.5% in January from 0.4% in December, while core CPI rose to 0.4% from 0.2% over the same period.

Stronger-than-expected US inflation data has led traders to scale back expectations of a dovish Federal Reserve (Fed) stance for the June policy meeting. According to the CME FedWatch tool, the probability for the Fed to reduce interest rates in June has eased to almost 30% after the US inflation data release.

Economic Indicator

RBNZ Inflation Expectations (QoQ)

The Inflation Expectations released by the Reserve Bank of New Zealand measures business managers´ expectations of annual CPI 2 years from now. An increase in expectations is regarded as inflationary which may anticipate a rise in interest rates. A high reading is positive (or bullish) for the NZD, while a low reading is seen as negative (or bearish).

GBP/USD stays defensive near 1.3450, US NFP eyed

GBP/USD remains defensive around 1.3450 in the European session on Friday, undermined by a broadly resilient US Dollar. The Middle East uncertainty is back in play, keeping the haven demand for the Greenback intact ahead of the all-important US Nonfarm Payrolls (NFP) data release.

EUR/USD holds above 1.1500 ahead of US NFP

EUR/USD keeps its range above 1.1500 in European trading on Friday, as the US Dollar consolidates the recent recovery, following renewed tensions in the Middle East and on the Strait of Hormuz reopening. Traders now eagerly await the July US Nonfarm Payrolls (NFP) report for a clear directional impetus.

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.

Shiba Inu Price Forecast: SHIB risks over 10% drawdown amid declining burn rate

Shiba Inu edges lower, facing downside pressure amid broader risk-off sentiment in the cryptocurrency market, including a delay in the CLARITY Act vote. The declining burn rate of SHIB tokens and retail support warn of deeper losses in the meme coin.

US Nonfarm Payrolls expected to rise by 80K in July

The United States Bureau of Labor Statistics is set to release the Nonfarm Payrolls data for July on Friday at 12:30 GMT. Investors expect NFP to rise by 80K following June’s disappointing print of 57K. The Unemployment Rate is seen holding steady at 4.2%, while the annual wage inflation, as measured by the change in the Average Hourly Earnings, is projected to remain unchanged at 3.5%.

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.