Key Points
- NZDUSD held around $0.579, near last week’s six-month low of $0.578.
- Markets price in a 25bps RBNZ cut next week, with a 35% chance of a deeper 50bps move.
The New Zealand dollar hovered near $0.579 on Wednesday, consolidating after modest gains as the U.S. dollar softened on fears of a looming government shutdown.
The risk of closure in Washington is fuelling uncertainty, with traders wary that key economic data, particularly the potential delay of September’s non-farm payrolls.
Such a disruption would complicate the Federal Reserve’s policy signals ahead of its late-October meeting.
Despite the brief reprieve from U.S. dollar weakness, the kiwi remains under pressure and trades close to last week’s six-month low of $0.578.
The currency continues to feel the weight of policy expectations at home, with markets fully pricing in a 25-basis-point cut by the Reserve Bank of New Zealand at next week’s meeting.
Futures markets also suggest a 35% probability of a larger 50-basis-point reduction, underscoring investor scepticism over the economy’s resilience.
Domestic Outlook
The latest ANZ Bank business outlook survey offered mixed signals. While headline business confidence held steady in September, a net 50% of firms expect better conditions ahead.
However, the optimism contrasts with sluggish underlying growth, leaving the RBNZ under pressure to act decisively.
Technical Analysis
The New Zealand dollar (NZDUSD) continues to struggle, trading at 0.57897, down 0.06%, with price action leaning bearish as the pair slips further below the 0.58 handle.
The Kiwi is being weighed down by persistent USD resilience and weaker demand for risk assets, while domestic economic headwinds and RBNZ’s cautious stance limit upside potential.
From a technical perspective, NZDUSD has clearly broken below its 30-day moving average, with the 5- and 10-day averages trending lower, signaling strong downward momentum.
The last major swing high was at 0.6120 in July, and since then the pair has been in a steady decline. Immediate support sits at 0.5750, with further downside risk extending toward the April low near 0.5487 if bearish pressure persists.
Momentum indicators confirm the bearish trend. The MACD is deeply in negative territory, with the MACD line staying below the signal line and widening, showing accelerating downside momentum. The histogram also supports this bias with persistent red bars.
Cautious Outlook
In the near term, the Kiwi is likely to remain under pressure unless risk sentiment improves or U.S. yields retreat. A sustained recovery above 0.5850 would be needed to ease the downside bias, but until then, rallies are likely to be capped.
