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by NZD/USD—The New Zealand dollar has recently dropped to around $0.612 due to the strengthening of the US dollar. This change follows the Federal Reserve’s latest projections, which suggested only one possible interest rate cut this year, likely in December. Supporting this outlook, Minneapolis Fed President Neel Kashkari referred to this projection as a “reasonable prediction” on Sunday.
NZDUSD Fundamental Analysis – 18-June-2024
New Zealand Services Sector Hits New Low
The economic situation in New Zealand is challenging. Recent data revealed that the services sector experienced a significant downturn in May, reaching its lowest since August 2021. This decline is particularly notable as it represents the weakest performance for a non-COVID lockdown month since the survey’s inception in 2007. These findings align with the current recession in New Zealand’s economy.
RBNZ Rate Cut Speculation Rises
As a result, there is increased speculation about the Reserve Bank of New Zealand (RBNZ) potentially cutting interest rates. The market has fully priced in a rate cut for November. However, the central bank previously indicated that any rate cuts are unlikely until mid-2025. This discrepancy highlights the uncertainty in the economic outlook.
Summary
Investors are now focused on the upcoming release of New Zealand’s first-quarter GDP data. Economists predict modest year-on-year growth of 0.2%, which will provide further insights into the country’s economic health and influence future monetary policy decisions.
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