The NZD/USD pair is trading positively around 0.5820 during the Asian session on Thursday. This comes as the US Dollar weakens due to a government shutdown after the US President and Congress failed to agree on a deal. As a result, the US weekly Initial Jobless Claims are not being published.
US private-sector jobs fell by 32,000 in September, with annual pay increasing by 4.5%. This has raised expectations that the Federal Reserve will reduce interest rates twice more this year. In addition, the US payrolls data was lower than the anticipated 50,000.
Factors Influencing the NZD
In New Zealand, the Reserve Bank’s dovish stance might pressure the Kiwi against the USD. Forecasts suggest two more rate cuts by March next year, though these depend on economic recovery speed. The New Zealand Dollar’s value is influenced by the country’s economic health, trading partner China’s economy, and dairy prices.
Macroeconomic data and broader risk sentiment also impact NZD. In risk-on scenarios, NZD often strengthens. However, in uncertain market conditions, it may weaken as investors seek safer assets. This information is for informational purposes only and does not offer investment recommendations.
With the US government shutting down as of yesterday, October 1, 2025, we are seeing immediate weakness in the US Dollar. This is pushing pairs like the NZD/USD above the 0.5800 level. We have seen this playbook before, for instance during the 35-day shutdown in late 2018 and early 2019, which created prolonged uncertainty and pressure on the dollar.
The most critical factor for the coming weeks is the data blackout. Without key releases like Nonfarm Payrolls, the market is flying blind, which should increase implied volatility in currency options. Traders should anticipate wider price swings and higher premiums on options contracts for major USD pairs as uncertainty becomes the dominant theme.
Anticipated Market Dynamics
The weak private payrolls data from September, showing a contraction of 32,000 jobs, reinforces the view that the Federal Reserve will have to cut interest rates. This shutdown only adds to the economic drag, making further rate cuts this year highly probable. Interest rate derivative markets will likely continue to price in aggressive easing from the Fed through the end of 2025.
However, we must also consider that the Reserve Bank of New Zealand has its own dovish stance, with forecasts suggesting more rate cuts are coming. This may limit how high the Kiwi can rally against the dollar, as both central banks appear to be in an easing cycle. This dynamic could create opportunities for range-trading strategies in the NZD/USD pair.
Typically, a US government shutdown is a risk-off event that would weaken commodity currencies like the NZD. For now, direct USD weakness is the stronger force, but we must watch global risk sentiment indicators like the VIX. If market fear escalates significantly, we could see a flight to safety that paradoxically strengthens the dollar and reverses the Kiwi’s recent gains.
