• NZD/USD rises for a fifth consecutive day, supported by broad USD selling pressure.
• Jerome Powell’s comments reinforce expectations of additional Federal Reserve rate cuts.
• A positive risk environment and the Reserve Bank of New Zealand’s hawkish stance support the Kiwi.

NZD/USD trades around 0.5820 on Thursday at the time of writing, up 0.10% on the day, consolidating above the key 0.5800 level reached the previous day, its highest point in more than two months. The pair remains clearly tilted to the upside, supported by a broad weakening of the US Dollar (USD) following the dovish tone adopted by the Federal Reserve (Fed) on Wednesday.

The Greenback’s decline intensified after the Fed cut its policy rate by 25 basis points while signalling a possible pause in January. Despite a relatively cautious official message, market participants focused on remarks from Jerome Powell, Chair of the Federal Reserve (Fed), who underlined the downside risks to employment and said the institution does not want its policy to further weaken job creation. This revived expectations of further rate cuts in 2026, weighing heavily on the USD and supporting risk-sensitive currencies such as the New Zealand Dollar (NZD).

The positive risk environment also strengthens demand for the Kiwi, particularly as the Reserve Bank of New Zealand (RBNZ) has adopted a more hawkish tone in recent weeks. After lowering its policy rate in November to a three-year low, the central bank signaled that the easing cycle was likely nearing its end, creating a contrast with the increasingly dovish expectations surrounding the Fed. This policy divergence continues to support NZD/USD’s upward momentum.

Investors will watch the release of the Business NZ Performance of Manufacturing Index (PMI) for November later in the day, an important indicator for assessing economic activity in New Zealand.

In the United States (US), data published earlier confirmed a cooling labour market. Initial Jobless Claims jumped to 236,000 for the week ending December 6, higher than the 220,000 expected and well above the revised 192,000 from the previous week. The four-week moving average also increased, while Continuing Claims, at 1.838 million, remain elevated. These figures align with the Fed’s assessment of a weakening employment landscape, a key factor behind its decision to cut rates.

Against this backdrop, the US Dollar Index (DXY) is slipping toward 98.25, its lowest level since mid-October, weighed down by softer macroeconomic data, a more accommodative policy outlook, and speculation surrounding Jerome Powell’s potential successor as his mandate expires in May. The possible nomination of Kevin Hassett, viewed as more dovish, adds further pressure on the USD.