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The NZD hangs near weekly low after China’s trade data as USD bulls await NFP

  • NZD/USD remains depressed for the second straight day as geopolitical risks underpin the USD.
  • Recovering oil prices revive inflation fears, bolstering Fed hike bets and also supporting the buck.
  • China’s trade data do little to provide any impetus to the Kiwi as the focus remains on the US NFP.

The NZD/USD pair sticks to a negative bias for the second consecutive day and trades near the lower end of its weekly range, around the 0.5865 region, during the Asian session on Friday. Spot prices move little following the release of China’s trade data as traders opt to wait for the crucial US monthly employment details.

In fact, China’s Trade Balance for June, in US Dollar (USD) terms, showed a surplus of $112.5 billion, higher than the $107.0 billion expected, but lower than the prior release of $125.62 billion. Additional details revealed that exports rose 23% YoY, compared to a 27% increase seen in June, while imports climbed 27.5% vs. 36% recorded previously. The data fails to provide any impetus to antipodean currencies, including the New Zealand Dollar (NZD), as geopolitical uncertainties continue to underpin the safe-haven US Dollar (USD) and weigh on the NZD/USD pair.

In fact, a Saudi official said that some Iraqi militia factions, in coordination with Yemen’s Iran-backed Houthis, are planning to attack the kingdom in the very near future, raising the risk of a wider regional conflict. This comes a day after Houthis claimed responsibility for an attack on a Saudi oil tanker in the Gulf of Aden. Furthermore, reports suggest that Iran is reviewing a plan ‌that would ban US and Israeli vessels from the Strait of Hormuz. This led to the overnight rise in oil prices, fueling inflation fears and bolstering US Federal Reserve (Fed) rate hike bets.

Hawkish Fed expectations, in turn, remain supportive of elevated US Treasury bond yields and turn out to be another factor supporting the Greenback. USD bulls, however, seem hesitant to place aggressive bets and look to the crucial US Nonfarm Payrolls (NFP) report for more cues about the Fed’s future policy path. In the meantime, the Reserve Bank of New Zealand’s (RBNZ) hawkish tilt could support the Kiwi and help limit the downside for the NZD/USD pair, warranting some caution before positioning for any further intraday depreciating move.

NZD/USD daily chart

Chart Analysis NZD/USD

Technical Analysis

The NZD/USD pair holds above the 100-day Simple Moving Average (SMA) at 0.5823, suggesting that the underlying demand is still in place despite recent consolidation around the 0.5860 area. A daily close below this level, however, would hint at fading upside momentum and expose deeper retracements toward the mid-0.5700s, while holding above it keeps the door open for a continuation of the advance toward the 0.5900 handle over the coming sessions.

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New Zealand Dollar slips under safe-haven US Dollar surge

  • Safe-haven US Dollar gains on Middle East tensions despite Iran-Oman Strait of Hormuz shipping deal.
  • Mixed US economic data shows weak ADP payrolls but steady ISM Services PMI growth.
  • Softer New Zealand jobs data limits aggressive rate hike expectations ahead of September RBNZ meeting.

NZD/USD extends its losses for the second successive day, trading around 0.5870 during the European hours on Thursday. The pair depreciates as the US Dollar (USD) gains support from renewed safe-haven demand following an Israeli airstrike in southern Lebanon. The attack, which killed one person and injured 11, marked one of Israel’s deadliest bombings since the June ceasefire began. Israel’s military issued a displacement order roughly 30 minutes prior to the strike, stating it was targeting and destroying Hezbollah infrastructure in response to the group’s violation of the ceasefire terms.

However, the Greenback could encounter headwinds as market participants weigh reports of a new maritime agreement between Iran and Oman. The two nations are finalizing a joint statement on a shipping route through the Strait of Hormuz, raising expectations for an increase in Middle Eastern energy flows. Although Tehran emphasized that the temporary two-to-four-month route does not mark a full reopening of the strategic waterway, the development has somewhat eased supply disruption fears.

US ADP private-sector payrolls rose by just 44,000 in July, a sharp drop from June’s revised 95,000 and well below the market forecast of 70,000. Conversely, the ISM Services PMI showed steady momentum, ticking up slightly to 54.1 in July from 54.0 in June, though it narrowly missed the expected 54.5 mark. Investors are now turning their attention toward upcoming economic drivers, specifically Thursday’s Initial Jobless Claims and Friday’s pivotal Nonfarm Payrolls (NFP) report.

Meanwhile, the New Zealand Dollar (NZD) faces challenges as a softer-than-expected labor market report reinforced expectations that any further interest rate increases would likely be gradual rather than aggressive. Nevertheless, markets continue to price in a quarter-point rate hike in September, following indications from the Reserve Bank of New Zealand’s (RBNZ) latest meeting that further policy tightening may be required to reduce monetary stimulus and bring inflation under control.

NZD and local yields slump as solid jobs data highlight lingering slack

Strategists at Brown Brothers Harriman observe that the New Zealand Dollar and local yields have come under pressure even as headline labour data surprise to the upside. They note that “NZD and NZ yields slump” after “New Zealand’s solid Q2 job and wage growth” revealed underlying slack in the labour market. According to BBH, “employment surged 0.5% q/q vs. 0.1% in Q1, well above consensus and RBNZ projection of 0.1%, while private regular wages were up 0.7% q/q (consensus & RBNZ: 0.6%) vs. 0.5% in Q1,” with these stronger readings masking ongoing labour market slack that continues to weigh on the currency and rates.

Technical Outlook: NZD/USD maintains a constructive bullish tone near 0.5900

In the daily chart, NZD/USD trades at 0.5870, maintaining a constructive bullish tone as spot holds above both the nine-day and 50-day Exponential Moving Averages (EMAs) at 0.5858 and 0.5810. The alignment of the shorter EMA above the longer one reinforces a nascent uptrend, while the 14-day Relative Strength Index (RSI) near 61 suggests firm but not yet overbought bullish momentum.

On the topside, initial resistance emerges at 0.5995, ahead of a stronger barrier at 0.6094, where sellers could attempt to cap further gains. On the downside, immediate support is provided by the nine-day EMA, followed by the 50-day EMA; a deeper setback would expose the horizontal floors at 0.5580 and 0.5486, levels that would need to hold to preserve the current bullish bias.

Chart Analysis NZD/USD
NZD/USD: Daily Chart
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New Zealand Dollar softens below 0.5900 on US-Iran talks uncertainty, stronger US PMI data

  • NZD/USD declines to around 0.5870 in Tuesday’s Asian session. 
  • Trump said the negotiations are Iran’s “last chance” to secure a deal to end the five-month conflict.
  • New Zealand’s employment report will be in the spotlight later on Wednesday. 

The NZD/USD pair loses traction to near 0.5870 during the Asian trading hours on Tuesday, pressured by stronger US economic data and safe-haven flows. Traders brace for New Zealand’s employment report, which will be published later on Wednesday. 

Business activity in the US manufacturing sector expanded at an accelerating pace in July, with the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) climbing to 55.6 in July from 53.3 in June. This figure came in above the market consensus of 54.0.

Additionally, uncertainty surrounding US-Iran talks remains high, boosting a safe-haven currency such as the US Dollar (USD) against the New Zealand Dollar (NZD). US President Donald Trump said on Monday that he is giving Iran “every last chance” to reach a deal. Trump claimed that an agreement to reopen the Strait of Hormuz and denuclearize Tehran is “imminent.”

Nonetheless, Iranian officials denied participating in direct talks with the US, saying that they are negotiating with mediators in Oman.

New Zealand’s unemployment rate is expected to climb to 5.4% in the second quarter (Q2) from 5.3% in the previous reading. Any signs of improvement in New Zealand’s labor market could lift the Kiwi in the near term. 

Analysts from ASB expect the Reserve Bank of New Zealand (RBNZ) to keep tightening toward a 3.25% year-end Official Cash Rate (OCR), while Westpac is forecasting hikes in September and December that would take the OCR to 3.75% within a year.

Kiwi support builds as RBNZ outlook firms on stronger labor signals

Strategists at Brown Brothers Harriman highlight that the recent “improvement in the ANZ Business employment intentions index to a five-month high in June points to more favorable labor market conditions.” They add that this firmer labor backdrop, combined with “above target inflation,” “argue for additional RBNZ rate hikes which is NZD supportive,” reinforcing the constructive policy and currency narrative around New Zealand.

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New Zealand Dollar Rises to 2-Month High

The New Zealand dollar rose to around $0.589 on the first trading day of August, reaching a two-month high, as a fresh wave of yen buying weighed broadly on the US dollar, while fresh negotiations in the Middle East lifted risk appetite. The greenback extended its decline after Japan confirmed it had engaged in joint yen-buying intervention with the US on Friday. Meanwhile, President Donald Trump said new talks with Iran would begin on Monday after he canceled a weekend attack against Tehran, raising hopes for progress toward resolving the months-long conflict. Improving domestic sentiment, with New Zealand businesses and consumers becoming more optimistic, also underpinned the kiwi. Traders now await the country’s second-quarter jobs report for further clues on the state of the economy. Currently, markets are almost fully pricing in a quarter-point rate hike by the Reserve Bank of New Zealand in September.

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New Zealand Dollar rises as ANZ Business Outlook Index jumps in July

  • NZD/USD rises as New Zealand’s July ANZ Business Outlook Index surged to 56.1, its highest since February.
  • Markets widely anticipate a 25-basis-point RBNZ interest rate hike at the September meeting.
  • The US Dollar could find support as three policy members dissented in favor of a rate hike.

NZD/USD extends its gains for the third consecutive day, trading around 0.5810 during the Asian hours on Thursday. The currency pair climbs higher as the New Zealand Dollar (NZD) receives support from a sharp rise in domestic business confidence.

New Zealand’s ANZ Business Outlook Index jumped to 56.1 in July, up significantly from 36.6 in the previous month to reach its highest level since February. This uptick was largely driven by easing international oil prices as geopolitical tensions in the Middle East began to subside.

Further underpinning the NZD’s strength are hawkish expectations surrounding the Reserve Bank of New Zealand (RBNZ). Following last week’s hot inflation report, markets are widely anticipating a 25-basis-point interest rate increase at the September meeting. Futures markets now price in rates reaching at least 3.0% by the end of the year, with a projected peak of 3.5% around mid-2027.

However, TD Securities stated that the recent escalation in regional tensions is increasingly disrupting critical energy shipping routes. Strategists highlight that “the return of Iranian-US strikes after a multi-day pause, along with continued Houthi risks for Saudi energy infrastructure, are keeping flows in both the Strait of Hormuz and Bab el-Mandeb heavily constrained,” underscoring the growing strain on global oil supply channels.

The upside for the NZD/USD pair could be limited, as the US Dollar (USD) may gain strength following a hawkish pause in interest rates by the Federal Reserve (Fed). Although the Fed kept rates steady in the 3.5%–3.75% range at its July policy meeting, an outcome widely anticipated by the markets, the decision revealed underlying hawkish sentiment.

Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack, and Minneapolis Fed chief Neel Kashkari all dissented, advocating instead for a 25 basis point rate hike. Reinforcing this stance during the post-meeting press conference, Fed Chairman Kevin Warsh stated that while the central bank will not offer forward guidance on future rate paths, it remains committed to taking all necessary actions to achieve its 2% inflation target.

Fed holds rates but hawkish tone keeps Dollar supported

The Fed Monetary Policy Statement scores 7.4/10 on the FXS Speechtracker, a notably more hawkish tone relative to the historical average of 4.9/10. By holding the key overnight rate at 3.50-3.75% while stressing elevated inflation, solid economic activity, and strong productivity and investment, the Fed signals confidence in growth and a firm commitment to price stability, reinforced by the 9-3 vote where three regional presidents favored a hike. The emphasis on ample reserves and steady labor markets underlines a bias toward further tightening if inflation fails to converge convincingly toward the 2% goal, a backdrop that tends to underpin the Dollar.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated 128.64, confirming that the overall policy stance remains firmly in hawkish territory. The combination of a high index level and a stronger-than-baseline speech score suggests that, despite no immediate rate move, the Fed continues to lean toward restrictive policy, a configuration that should keep Dollar bulls engaged while limiting upside for Euro and Yen in the near term.

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Trade of The Day – AUD/NZD

Facts: The pair is trading below a key resistance at 1.2086 AUDNZD sits below 100-period moving average

Recommendation: Trade: Short position on AUDNZD at market price Target: 1.1660 Stop: 1.2145

Opinion:

AUDNZD has been trading in an upward trend recently. However looking at the D1 interval, we can see that a potential trend reversal took place. The pair broke below the lower limit of 1:1 structure, which according to the Overbalance strategy heralds a bigger downward move. It seems that as long as the price sits below the 1.2086 resistance, one should expect the price to continue to fall. In addition the price sits below the 100-period moving average form D1 interval. We recommend going short AUDNZD at market price with a target of 1.1660. We also recommend placing a stop loss order at 1.2145.

Source: xStation5

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New Zealand Dollar struggles above mid-0.5700s as USD stays firm ahead of FOMC meeting

  • NZD/USD struggles to capitalize on a modest Asian session rise amid a bullish USD undertone.
  • Geopolitical uncertainties continue to underpin the safe-haven buck and weigh on spot prices.
  • Traders, however, seem hesitant and move to the sidelines ahead of the crucial FOMC meeting.

The NZD/USD pair turns lower for the second consecutive day following a modest Asian session uptick to the 0.5785 region on Tuesday. Spot prices currently trade around the 0.5770-0.5765 area, just above last week’s swing low, as the US Dollar (USD) retains its bullish undertone amid geopolitical uncertainties.

The US paused its bombing campaign against Iran following roughly two weeks of strikes. Moreover, US President Donald Trump said on Monday the US was having good talks with Iran and that there was a chance of a resolution. This raised hopes of pulling the US and Iran back to the negotiating table, though the optimism fades rather quickly after Saudi Arabia, Jordan and Iraq reported drone attacks. Moreover, Trump warned that US strikes would resume if the negotiations failed to deliver, helping the safe-haven USD preserve its recent strong gains back closer to the monthly high, which continues to weigh on the NZD/USD pair.

Traders, however, seem hesitant to place aggressive bets ahead of the highly anticipated two-day FOMC policy meeting, starting later today. The US Federal Reserve (Fed) will announce its decision on Wednesday and is expected to leave rates unchanged. Hence, the focus will be on the accompanying policy statement and the post-meeting press conference. Investors will look for cues about the Fed’s future policy path, which will influence the Greenback and drive the NZD/USD pair. In the meantime, firming expectations that the Reserve Bank of New Zealand (RBNZ) will deliver another rate hike in September could support the New Zealand Dollar (NZD).

Strategists at Brown Brothers Harriman argue that “above target inflation and a more favorable domestic growth outlook argue for additional RBNZ rate hikes which is NZD supportive.” They note that at its 8 July meeting, the RBNZ lifted the Official Cash Rate by 25bp to 2.50% and signalled that “further OCR increases appear likely at upcoming meetings.” Reflecting this hawkish bias, BBH highlight that “the swaps curve price in 60bps hikes by year-end and a total of 100bps of tightening over the next twelve months to 3.50% – near the top of the RBNZ estimated neutral range (2.20%-4.10%).”

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New Zealand Dollar bulls seem hesitant; downside seems limited amid weak USD

  • NZD/USD struggles to build on an Asian session uptick, though the downside remains cushioned.
  • Iran diplomacy hopes and receding Fed hike bets undermine the USD, lending support to the pair.
  • Hawkish RBNZ expectations also warrant caution for bears ahead of the FOMC meeting this week.

The NZD/USD pair kicks off the new week on a positive note amid a broadly weaker US Dollar (USD), though it struggles to capitalize on gains beyond the 0.5800 mark.

The US and Iran paused following 13 straight nights of strikes, reviving hopes for a diplomatic resolution to end a five-month-old US-Iran conflict. US ambassador to the United Nations (UN) Mike Waltz said that while forces remained locked and loaded, President Donald Trump wants to give negotiations a little bit of room. This prompts traders to unwind some of the geopolitical risk premium, which, in turn, undermines the safe-haven USD and lends some support to the NZD/USD pair.

Meanwhile, the latest optimism triggers a steep decline in crude oil prices, easing inflationary fears and tempering US Federal Reserve (Fed) rate-hike expectations. This is evident from a modest pullback in US Treasury bond yields, which turns out to be another factor that drags the USD away from the vicinity of the monthly high, retested last week. Traders, however, refrain from placing aggressive bearish bets on the USD and opt to wait for the outcome of a two-day FOMC policy meeting.

The US central bank is scheduled to announce its decision on Wednesday and is universally anticipated to leave interest rates unchanged. Hence, investors will look for fresh cues about the Fed’s future policy path, which will play a key role in influencing the USD price dynamics. Apart from this, developments surrounding the Middle East crisis should infuse volatility in financial markets, which should further drive the USD demand and provide some meaningful impetus to the NZD/USD pair.

In the meantime, stronger-than-expected inflation data from New Zealand reaffirmed expectations that the Reserve Bank of New Zealand (RBNZ) will deliver another rate hike at its September meeting. The hawkish outlook might continue to act as a tailwind for the New Zealand Dollar (NZD), which favors NZD/USD bulls and suggests that any corrective pullback is more likely to be bought into.