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NZD/USD
The NZD/USD currency pair has continued its downward trend, declining for the fourth consecutive day and trading around the 0.5640 level during Thursday's European trading session. The New Zealand dollar (NZD) is facing persistent weakness, primarily driven by market expectations of a more accommodative monetary policy from the Reserve Bank of New Zealand (RBNZ). The RBNZ is widely anticipated to implement another 50 basis point interest rate cut at its upcoming meeting on February 19th, following two previous rate reductions in the current cycle. These expectations of further monetary easing are weighing heavily on the New Zealand dollar. On the economic front, New Zealand released mixed data. The country recorded a trade surplus of NZ$219 million in December, driven by robust export growth of 17%, significantly outpacing a 6.5% increase in imports. This positive trade balance provides some support for the New Zealand dollar. However, offsetting this positive news, the ANZ Bank Business Confidence Index fell to a five-month low of 54.4 in January, compared to 62.3 in December. This decline in business confidence reflects growing concerns about the economic outlook. Similarly, the Business Expectations Index, reflecting future business prospects, decreased for the third consecutive month, reaching its lowest level since August at 54.4 in January 2025. These declining business confidence and expectation indicators point to a potential slowdown in the New Zealand economy, adding to the downward pressure on the NZD.
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