USD to NZD Rate to Fall Below 0.60 on Dovish RBNZ Policy Shift

The USD to NZD rate has been quite volatile, with NZD/USD surging 5 cents in August and September, but the reversal in October points below 0.60. Buyers failed to push above the resistance zone below 0.64 when the UD was retreating, and as the USD regained its momentum, NZD/USD reversed lower losing 3 cents already, with the RBNZ helping along the way.

NZD/USD Chart Monthly – The 20 SMA Has Been Broken

Since early October, the NZD/USD exchange rate has been on a steady decline, falling further this week and dipping below the 0.61 level, nearing its initial target of 0.60. The Kiwi dollar dropped to 0.6040 last week after the Reserve Bank of New Zealand implemented a 0.50% rate cut, pushing the pair through the 0.61 mark. The weaker-than-expected Q3 CPI data in New Zealand reinforced market expectations for another 50 basis point cut at the upcoming meeting, with a 12% chance priced in for a more aggressive 75 basis point reduction.

Currently, the NZD/USD is stabilizing around the key support zone at 0.6050. Buyers may look to step in at this point, aiming for a rally toward the 0.6217 resistance level, with a defined risk just below the support. However, sellers will likely attempt to push the price lower, seeking to build their bearish positions and target the 0.5850 support level if the pair breaks below current levels.

The situation in China hasn’t been helping commodity dollars either, with the Chinese economy going through a tough period in 2024. Chinese authorities introduced a stimulus programme, but markets don’t seem satisfied with it. Last night, the People’s Bank of China cut the Loan Prime Rates by 20 bps.

Extract: The People’s Bank of China has lowered both the 1-year and 5-year Loan Prime Rates, cutting the 1-year rate to 3.10% and the 5-year rate to 3.60%. These reductions were anticipated and reflect ongoing efforts to stimulate economic activity.

People’s Bank of China Loan Prime Rate (LPR) Decision

• People’s Bank of China (PBOC) cuts 1-year Loan Prime Rate (LPR) to 3.10%, in line with expectations, from 3.35% previously.
• PBOC reduces the 5-year Loan Prime Rate (LPR) to 3.60%, down from 3.85%.

NZD/USD Live Chart