NZD/USD gains ground above 0.5800 on weak US Jobless Claims data

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NZD/USD gains traction to around 0.5815 in Friday’s early Asian session.
US weekly Jobless Claims rose to 236,000 last week.
Business NZ PMI came in at 51.4 in November.

The NZD/USD pair trades in positive territory near 0.5815 during the early Asian session on Friday. Weaker-than-anticipated US employment data weigh on the Greenback against the New Zealand Dollar (NZD). The Federal Reserve (Fed) officials are set to speak later in the day, including Beth Hammack and Austan Goolsbee.

The US Department of Labor (DOL) revealed on Thursday that the US weekly Jobless Claims rose to 236,000 in the week ending December 6. The figure came in above the market consensus of 220,000 and was higher than the previous week of 192,000 (revised from 191,000). This reading registered the biggest increase since mid-July of 2021 and exerted some selling pressure on the US Dollar (USD).

The Fed decided to reduce its benchmark interest rate by a quarter percentage point on Wednesday, bringing the target range to 3.50% to 3.75%. This was the third consecutive cut this year. Fed Chair Jerome Powell said during the press conference that the US central bank is now "well positioned to wait and see how the economy evolves.” Fed officials projected one more quarter-percentage-point rate cut in 2026.

The latest data released by Business NZ showed on Friday that the Business NZ Performance of Manufacturing Index (PMI) came in at 51.4 in November. This figure indicated that the manufacturing sector in New Zealand is in expansion for the second consecutive month, while it remains stable at around the same level as October.

The Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 25 basis points (bps) to 2.25% at its November meeting. The New Zealand central bank signaled that future rate changes will depend on the economic and inflation outlook, and analysts believe the rate-cutting cycle is likely finished for now. This, in turn, could provide some support to the Kiwi against the USD.

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.