NZD/USD remains below 0.6050 as traders expect RBNZ to keep rates unchanged

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NZD/USD remains subdued during the Asian hours on Tuesday, trading around 0.6030 at the time of writing.

NZD/USD weakens as the New Zealand Dollar remains subdued after Statistics NZ reported a 2.5% January food price surge.
Traders stay cautious ahead of Wednesday’s RBNZ meeting, with rates widely expected to remain at 2.25%.
Traders await Fed Meeting Minutes, Q4 GDP, and core PCE data for clearer policy direction.

NZD/USD remains subdued during the Asian hours on Tuesday, trading around 0.6030 at the time of writing. The pair depreciates as the New Zealand Dollar (NZD) holds losses after Statistics NZ reported that the Food Price Index rose 2.5% month-over-month (MoM) in January, the largest monthly increase in four years. Annual food inflation accelerated to 4.6% from 4.0% in December, with all subgroups recording gains.

Traders remain cautious ahead of the Reserve Bank of New Zealand (RBNZ) policy meeting on Wednesday. While the central bank is widely expected to hold the cash rate at 2.25%, some market participants anticipate potential rate hikes later in the year, possibly in September and October.

The NZD/USD pair is also weighed down by a firmer US Dollar (USD), which has advanced for a second consecutive session. Still, the Greenback may face challenges as softer January US Consumer Price Index (CPI) data reinforced expectations that the Federal Reserve (Fed) may begin cutting rates later this year. Traders now await the Fed’s Meeting Minutes, Q4 GDP data, and the core PCE Price Index for clearer signals on the policy outlook.

Meanwhile, January’s US Nonfarm Payrolls posted the strongest gain in more than a year, and the Unemployment Rate unexpectedly declined, indicating a stabilising labour market. However, sentiment remains guarded as the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, continues to hover closer to 3% than its 2% target, with disinflation progress uneven since mid-2025.

New Zealand Dollar FAQs

What key factors drive the New Zealand Dollar?

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

How do decisions of the RBNZ impact the New Zealand Dollar?

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

How does economic data influence the value of the New Zealand Dollar?

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

How does broader risk sentiment impact the New Zealand Dollar?

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.