USD to NZD Rate Little Changed at 0.61 After RBNZ Gov Orr Comments

The USD to NZD rate has been quite volatile in recent months, but last week the volatility declined somewhat despite the RBNZ rate cut. The trading range was around 1 cent wide, with the price falling below 0.61 briefly and climbing back above it, while early this morning we had the RBNZ Gov Orr speech, as well as the BusinessNZ Services Index.

The USD’s decline over the past two months has led the NZD/USD exchange rate to climb by over five cents, fueled by growing expectations for a substantial rate-cutting path from the Federal Reserve. However, volatility has heightened with the Reserve Bank of New Zealand’s (RBNZ) recent rate cut, which accelerated the NZD’s slide against the USD.

Following a previous 25 basis point reduction, the RBNZ last week implemented another cut, this time by 50 basis points, as part of its effort to relieve inflationary pressures. This move has reinforced hopes that the RBNZ may continue with a more accommodative policy stance in the near future. As a result, NZD/USD fell by more than two cents last week before finding support, rebounding above 0.61 by the week’s close.

NZD/USD Chart Daily – The 100 SMA Held As Resistance

Despite this recovery, the bounce remains fragile, especially as fresh Chinese data over the weekend showed further declines in inflation, which did little to strengthen risk currencies like the NZD. The NZD/USD’s gains have since retraced, as the likelihood of another 50 basis point rate cut by the Fed has diminished. Additionally, the lack of concrete details from Chinese officials regarding potential fiscal stimulus has negatively impacted risk-sensitive currencies, adding to the uncertainty around the NZD.

New Zealand BusinessNZ Services Index – September Highlights

• September Services PMI:

  • Recorded at 45.7 points, a slight increase from 45.5 points in August.
  • This marks the seventh consecutive month of contraction (below 50 points).

• Economic Commentary by BNZ’s Senior Economist, Doug Steel:

  • The PSI sub-indices showed mixed movements in September, but all remained below 50 for seven months, indicating ongoing challenges.
  • Falling interest rates are expected to provide support in the future, yet the services sector is currently facing significant headwinds.

Comments from the RBNZ Gov Orr

NZD/USD Live Chart