Key Moments
- NZD/USD traded near 0.5895 in Friday’s Asian session as the US Dollar eased following comments from Fed Governor Christopher Waller.
- Market-implied odds of a 25 bps Federal Reserve rate hike in September fell to 50.2% from 63.2% after Waller signaled a preference to keep rates unchanged if inflation cooperates.
- The RBNZ raised the Official Cash Rate to 2.75% in a dovish hike, with officials indicating a likely wait until December before any further tightening.
NZD/USD Firms Ahead of US Jobs Data
NZD/USD advanced to around 0.5895 during Asian trading on Friday as the New Zealand Dollar outperformed a softer US Dollar. The move came as market participants positioned ahead of the US August employment report due later in the day.
The Greenback lost some traction against the Kiwi after remarks from Federal Reserve Governor Christopher Waller, which encouraged a reassessment of near-term US rate expectations.
Waller Remarks Cool September Hike Expectations
On Thursday, Waller indicated he currently favors leaving interest rates unchanged at the Federal Reserve’s September meeting, as long as forthcoming inflation figures do not deliver negative surprises. Following his comments, traders scaled back projections for an imminent policy move, pressuring the US Dollar.
According to pricing referenced from the CME’s FedWatch tool, the probability of a 25 basis point rate increase in September declined to 50.2%, down from 63.2% on Wednesday. This shift in expectations supported NZD/USD as the rate differential outlook became slightly less favorable for the US currency.
RBNZ Delivers Dovish Hike, Signals Patience
On the New Zealand side, the Reserve Bank of New Zealand’s latest decision introduced a more cautious tone. The RBNZ lifted the Official Cash Rate (OCR) by 25 basis points to 2.75% on Wednesday, in line with consensus.
RBNZ Governor Anna Breman stated that it’s likely there will be a further increase, but policymakers want to take time to assess the impact of the increases to date. That message was reinforced by RBNZ Assistant Governor Karen Silk, who said on Friday that the central bank is more likely to wait until December before raising interest rates again. This combination of action and guidance has been characterized as a dovish hike, which could limit upside momentum for the Kiwi.
| Central Bank | Latest Move | Current Rate / Level | Forward Signal |
|---|---|---|---|
| Federal Reserve (US) | No new decision described | Not specified | Waller leaning toward holding rates in September if inflation data cooperate |
| Reserve Bank of New Zealand | Hike of 25 bps | OCR at 2.75% | Further increase likely, but RBNZ more inclined to wait until December |
Commerzbank: RBNZ Stays Data Dependent
Analysts at Commerzbank emphasized that the RBNZ has been careful not to commit to a rigid path for interest rates. They noted that the central bank “stressed that the future rate path is not pre-determined,” and instead signalled that “further tightening is possible but will depend on the persistence of inflation and the strength of the recovery.”
This assessment highlights an explicitly data-driven approach, with policymakers keeping open the possibility of additional hikes, while clearly linking any future moves to how inflation and growth conditions develop.
Technical Picture: Modest Bullish Tone in NZD/USD
On the daily chart, NZD/USD maintains a slightly constructive bias as the pair trades above the 100-day simple moving average (SMA) and above the lower Bollinger Band, suggesting buyers are still active on pullbacks.
However, spot remains just below the 20-period Bollinger SMA, indicating that upside momentum has not yet turned into a strong rally. The Relative Strength Index (RSI) hovering near 51 points to only mild positive momentum.
| Technical Level | Type | Approximate Level | Implication |
|---|---|---|---|
| Bollinger middle band | Initial resistance | 0.5910 | First cap for further upside |
| Upper Bollinger Band | Next resistance | 0.5985 | Key barrier if recovery extends |
| 100-day SMA | Immediate support | 0.5845 | First line of defense on pullbacks |
| Lower Bollinger Band | Secondary support | 0.5832 | Break below would undermine the current constructive setup |
A sustained move above 0.5910 would be needed to reinforce the bullish case and open a path toward the upper Bollinger Band around 0.5985. On the downside, a close below the 100-day SMA near 0.5845, and especially under the lower band at 0.5832, would weaken the positive bias and suggest scope for deeper retracement.
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