New Zealand Dollar/US Dollar FX Spot Rate

BofA Securities said the U.S. dollar faces further downside as investors question whether Treasury efforts to suppress long-term yields and the Federal Reserve's response will weaken confidence in American policy. The Treasury said it would at least double the maximum size of long-dated bond buybacks to $4 billion per operation from $2 billion between September 9 and November 4. BofA said the announcement's timing, outside the regular quarterly refunding process, suggested the Treasury was primarily trying to contain long-term borrowing costs rather than improve market liquidity. Suppressing yields without corresponding fiscal restraint could leave the exchange rate as the main adjustment mechanism, placing downward pressure on the dollar. The greenback weakened after the announcement, while gold and the Swiss franc outperformed, and U.S. equities declined despite lower 10-year Treasury yields, indicating renewed concern about policy credibility. The Fed's response will be critical, as accommodative financial conditions, particularly if the central bank absorbs increased Treasury bill issuance through its balance sheet, would strengthen the case for selling the dollar against higher-beta currencies. BofA added to its dollar shorts by recommending a long position in NZD/USD at 0.5957, with a target of 0.62 and a stop at 0.58, and expects two additional rate increases from the Reserve Bank of New Zealand.

Among the major economic indicators released from August 3 to 7, the ADP employment report, a leading indicator for US nonfarm payrolls, and the ISM non-manufacturing index are expected to set the direction for the dollar. New Zealand's April–June quarter employment report, due on the 5th, is forecast to show a 0.3% quarter-on-quarter rise in employment and an unemployment rate of 5.3%. If the labor market holds firm, buying of the New Zealand dollar could intensify. The US ADP employment report for July, also on the 5th, is expected to show a gain of 75,000, slowing from the previous month. A weak result could trigger dollar selling on expectations of earlier rate cuts, while a solid reading would support dollar buying. Canada's July employment report, due on the 7th, is forecast to show a gain of 15,000 jobs and an unemployment rate of 6.5%. As it is released simultaneously with the US employment report, the reaction in the US dollar–Canadian dollar pair could be complex.

NZD/USD pulled back from eight-week highs at 0.5885 but remains above previous highs around 0.5860, keeping bears at bay for now. The pair is on track for a nearly 1.5% weekly rally, buoyed by US Dollar weakness after the Federal Reserve left its Federal Funds Rate unchanged at the 3.50%-3.75% range and Chairman Warsh’s lack of guidance was taken as a dovish sign. Kiwi bulls lost some momentum on Friday after Chinese NBS Manufacturing PMI figures showed an unexpected contraction in July, weighing on the New Zealand Dollar given China’s role as a major trading partner. Technical analysis shows the 4-Hour RSI remains above 70, hinting at overbought conditions, while the MACD stays above its signal line, suggesting upside pressure is intact. A deeper correction below 0.5860 could find support between the ascending trendline from June 25 lows at 0.5785 and the July 23, 27, and 29 lows around 0.5865, while resistance above 0.5885 lies at the 78.6% Fibonacci retracement of the June sell-off at 0.5911 ahead of June’s peak near 0.6000.

New Zealand's second quarter consumer price index rose 4.1 percent from a year earlier, the highest in two and a half years, according to Statistics New Zealand. The increase exceeded analyst expectations of 4.0 percent and the Reserve Bank of New Zealand's forecast of 3.9 percent, strengthening expectations of a policy rate hike in September. On a quarter-on-quarter basis, prices rose 1.5 percent, above the 1.4 percent median forecast in a Reuters poll of economists. The largest contributor to inflation was petrol, which rose 27.5 percent, while diesel prices surged 71.1 percent. Without these, the annual increase would have been just 2.9 percent. Non-tradeable inflation was 3.4 percent year-on-year, the lowest in five years, down from 3.5 percent in the first quarter.

NZD/USD is trading near one-month highs around 0.5842 as buyers retain the upper hand. The Reserve Bank of New Zealand’s hawkish stance is supporting the Kiwi, while a stronger US Dollar is capping further upside. The pair fluctuated between minor gains and losses on Thursday after climbing to a one-month high earlier in the week.

NZD/USD remains on the front foot on Friday and is heading for a second consecutive weekly gain after the Reserve Bank of New Zealand raised the Official Cash Rate by 25 basis points on Wednesday and signaled that further policy tightening may be needed, boosting the New Zealand Dollar. However, overhead simple moving averages are capping the upside, limiting the pair's recovery.

Oil prices surged after the U.S. and Iran exchanged fresh military strikes, the most significant escalation since last month's ceasefire, with President Trump declaring their memorandum of understanding 'over'. Brent crude traded above $78 per barrel following U.S. strikes on Iranian targets and Iranian attacks on U.S. bases, while Washington revoked a sanctions waiver on Iranian oil effective July 17. Global stock markets fell as a chip selloff continued, dragging South Korea's KOSPI into bear market territory with a 20% drop from its late-June record close, though it remains up more than 70% this year. The SOX chip index slid nearly 5% and the Nasdaq fell over 1%, with SpaceX shedding nearly 7% on its first day in the Nasdaq 100. The New Zealand dollar jumped after the central bank hiked rates by a quarter-point to 2.5%, and bond prices fell across the board ahead of the release of last month's Fed policy meeting minutes.

The NZD/USD pair rallied strongly to the 0.5710-0.5715 area after the Reserve Bank of New Zealand raised interest rates for the first time in three years. The hawkish decision propelled the pair above the 0.5700 mark during Asian trading on Wednesday.

The Reserve Bank of New Zealand unanimously decided at its monetary policy committee meeting on the 8th to raise the policy rate by 0.25% to 2.50%. It indicated that inflation is expected to persist over the medium term and judged that reducing monetary easing is appropriate to curb inflation. This marks the first rate hike in 3 years and 2 months.

The New Zealand Dollar traded with a positive bias against the US Dollar for a second straight day on Wednesday, though it lacked strong bullish conviction and stayed below the mid-0.5800s during the Asian session. The move came as an Iran peace deal undermined the greenback ahead of the Federal Open Market Committee meeting.