NZD/USD softens despite strong Q3 GDP – BBH

FXStreet Insights Team FXStreet

NZD/USD slipped to 0.5766 as markets digest New Zealand’s stronger-than-expected Q3 GDP growth of 1.1% q/q. Despite robust activity across most sectors, the Reserve Bank of New Zealand (RBNZ) maintains that the policy rate will likely remain at 2.25% through 2026, keeping the currency range-bound in the near term, BBH FX analysts report.

RBNZ signals policy steady through 2026

"NZD/USD is trading heavy near 0.5766. New Zealand real GDP growth overshot expectations in Q3. Real GDP rebounded by 1.1% q/q (consensus: 0.9%, RBNZ projection: 0.4%) vs.-1.0% in Q2. The growth pick-up in Q3 was broad-based, with increases in 14 out of 16 industries."

"The RBNZ signaled at its last November meeting that it’s done easing with a policy rate forecast implying no change until Q4 2026 followed by rate hikes in Q1 2027. The swaps curve is more aggressive and price-in 40bps of rate increases over the next twelve months."

"Earlier this week, RBNZ Governor Anna Breman pushed back against market expectations for rate hikes next year. Breman stressed that 'if economic conditions evolve as expected the OCR is likely to remain at its current level of 2.25% for some time'. We agree. There’s still significant spare capacity in the New Zealand economy, with the output gap projected to average -1.1% of potential GDP over 2026 vs. -1.6% in 2025. NZD/USD will likely trade within a 0.5700-0.5860 range in the near-term."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.