The New Zealand Dollar dips to a new low and bounces as Crude Oil gets cheaper
Four weeks of selling have taken NZD/USD from just under 0.6000 to its lowest since early July. On Tuesday the pair dipped under 0.5700, then climbed back into the 0.5700 to 0.5800 range it has traded in since September 16, and it's trading in the lower half of that range.
The New Zealand Dollar (NZD) experienced a significant drop to its lowest point since early July, hitting just under 0.5700 against the US Dollar (USD). However, on Tuesday, the NZD bounced back, trading in the 0.5700 to 0.5800 range, which it has been in since September 16. The bounce in the NZD's value was attributed to a decrease in Crude Oil prices.
New Zealand's economy grew by 0.2% in the second quarter, surpassing the 0.1% forecast and the Reserve Bank of New Zealand's (RBNZ) expectation of no growth. Annual growth also came in at 2.6%, beating the 2.2% forecast. The RBNZ expects inflation to remain above 3% for the rest of 2026, which is why it has increased interest rates.
The RBNZ's main interest rate, the Official Cash Rate (OCR), is currently at 2.75%. Despite the RBNZ Governor's statement that another rate increase is likely, the NZD only experienced a minor movement, as the Federal Reserve had raised its own interest rate the previous day. New Zealand's fuel prices, which contribute to inflation, have risen to 4.1% in the second quarter due to the drop in Crude Oil prices.
As a major export market for China, a deal that eases US tariffs on Chinese goods could support demand for New Zealand's dairy and meat products, leading to increased buying of the NZD. The US durable goods report and the US manufacturing survey are expected to be released on Friday and Wednesday, respectively. If the US economy shows strength, it could lead to another Federal Reserve rate increase on October 28, the same day the RBNZ decides on its policy.
Australia's August jobs report and the Reserve Bank of Australia's meeting also have an impact on the NZD, as the two currencies often move together.
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