The New Zealand dollar is under pressure at the 0.57 level
The New Zealand dollar (NZD/USD) has remained under pressure near the 0.5700 level in recent sessions, edging slightly lower for two consecutive days. During the Asian session on July 7, the pair traded around 0.5705 – still above the 20‑period simple moving average but capped by the 100‑period SMA. A combination of softer commodity prices, a firmer US dollar, and divergent views within the Reserve Bank of New Zealand (RBNZ) are jointly weighing on the kiwi.
Falling commodity prices are the first headwind. The ANZ Global Commodity Price Index declined 1.0% month‑on‑month in June, dragged down by easing Middle East tensions and lower oil prices. As a commodity‑exporting economy, New Zealand’s export outlook has taken a hit, undermining support for the kiwi.
A strong US dollar adds another layer of pressure. Federal Reserve Governor Christopher Waller recently struck a hawkish tone, stating that policymakers remain committed to the 2% inflation target and emphasising that risks have “reversed” – with the labour market stabilising while inflation shows signs of re‑emerging. According to the CME FedWatch Tool, financial markets are now pricing in a 77.3% probability of a Fed rate hike by year‑end. The US ISM services PMI eased to 54.0 in June, but the employment sub‑index jumped sharply from 47.9 to 51.2, reinforcing the dollar’s strength on resilient data.
Divergence within the RBNZ’s own policy committee is adding to market confusion. The NZIER Shadow Board was almost evenly split on the July meeting outcome – with a narrow majority favouring keeping rates unchanged, though it was a close call against a 25‑basis‑point hike. Still, members maintained a consistent expectation that the official cash rate (OCR) will rise to a range of 3.00%–3.25% over the next 12 months. Markets widely expect the RBNZ to raise the OCR by 25 basis points to 2.50% this week, which would be its first hike in more than three years. ANZ believes persistent inflation risks and a weaker kiwi make immediate action necessary. Westpac, however, expects the central bank to hold steady, pointing to faster‑than‑expected declines in oil prices, which ease associated inflationary pressures and give the RBNZ more time to wait and see.
On the technical front, the relative strength index (RSI) sits near 58, suggesting stable but not overextended bullish momentum. Markets are now closely watching the RBNZ’s rate decision and policy statement due on Wednesday. Whatever the short‑term decision, the kiwi’s medium‑term direction will depend largely on the central bank’s forward guidance signals.