23.09.202502:33:47UTC+00New Zealand Dollar Under Pressure

The New Zealand dollar declined to approximately $0.586 on Tuesday, nearing a low last seen over two weeks ago, after a short-lived recovery in the previous session. Investors are exercising caution as they anticipate the government's decision on the new governor of the Reserve Bank, whose term will commence later this year. The currency remains pressured by the outlook for further interest rate cuts, following unexpectedly weak Q2 GDP figures which have strengthened the case for additional monetary policy easing. Markets have fully anticipated a 25-basis-point reduction, bringing rates down to 2.75% in October, with a roughly 25% chance of a more substantial half-point cut. Meanwhile, some support for the currency came from a softer US dollar, as market participants evaluated recent comments from the Federal Reserve. Although several officials expressed the need for patience amid stabilizing inflation, others warned that current policies might be overly restrictive, potentially impacting the labor market without significant easing. All eyes are now on Friday’s release of the PCE price index, the Fed’s preferred measure of inflation, for new policy insights.