NZD/USD moves above 0.6000 despite NZIER’s recommendation for a rate cut

• NZD/USD appreciates as the US Dollar extends its losses amid growing US-debt concerns.
• The US deficit could increase by $3.8 billion if Trump’s “One Big Beautiful Bill” passes through the Senate floor.
• NZIER’s half of the members suggested that the RBNZ should deliver a 25 basis-point rate cut on Wednesday.

NZD/USD hits fresh six-month highs, with trading around 0.6030 during the Asian hours on Monday. The pair continues its winning streak for the second successive day as the US Dollar remains under downward pressure amid rising United States (US)-debt concerns.

The US fiscal deficit could increase further when Trump’s “One Big Beautiful Bill” passes through the Senate floor. The Congressional Budget Office (CBO) noted that the bill is expected to increase the deficit by $3.8 billion, as it would deliver tax breaks on tip income and US-manufactured car loans.

Moreover, Trump’s bill may increase the risk of bond yields staying higher for longer. Higher bond yields can keep borrowing costs higher for consumers, businesses, and governments, which increases uncertainty surrounding the United States (US) economy.

Half of the members of the ‘Shadow Board”, the New Zealand Institute of Economic Research (NZIER), suggested that the Reserve Bank of New Zealand (RBNZ) should deliver a 25 basis-point Official Cash Rate (OCR) cut in the upcoming Monetary Policy Statement on Wednesday. One member recommended a 50 basis-point cut, while several members suggested that the central bank keep the OCR unchanged in May.

The RBNZ is widely anticipated to lower the Official Cash Rate by 25 basis points as inflation remains low, while growth remains a major concern. Markets expect the RBA interest rate to fall to around 3.0% or 2.75% by the end of the year.