NZD Advances as Markets Weigh Fed Signals and Open RBNZ Call

Key Moments

NZD/USD advanced toward 0.5650 in Friday’s Asian session as the US Dollar softened against the Kiwi.
Fed Chair Kevin Warsh refrained from signaling the outcome of the late-October policy meeting, leaving rate options open.
RBNZ Chief Economist Paul Conway described the late-October rate decision as “wide open” despite ongoing inflation pressures.

Dollar Eases as Warsh Avoids Policy Hints

The NZD/USD pair moved higher toward 0.5650 during Asian trading on Friday, with the New Zealand Dollar gaining ground as the US Dollar came under pressure following comments from Federal Reserve Chair Kevin Warsh.

Fed Chairman Kevin Warsh said on Friday that he does not “prejudge” interest-rate decisions, giving no preview of whether the central bank will hike or, as markets expect, hold short-term rates steady at its upcoming October 27-28 meeting.

US Inflation Data and Fed Rate Expectations

Fresh inflation data added complexity to the policy outlook. The US Producer Price Index (PPI) increased by 6.3% year-on-year in September, compared with a 5.6% rise in August (revised from 5.4%), according to the Bureau of Labor Statistics on Thursday. This was the largest gain since 2022 and exceeded the anticipated 5.3% increase.

In response, market participants adjusted their expectations for further tightening. Traders are now pricing in about a 27.7% probability of a rate hike later this month, according to the CME FedWatch Tool.

At the same time, comments from other Fed officials pointed to a cautious stance on immediate action. San Francisco Fed President Mary Daly and Fed Vice Chair for Supervision Michelle Bowman indicated that an immediate rate increase might not be necessary.

RBNZ Outlook: October Decision “Wide Open”

On the New Zealand side, policy uncertainty also remained in focus. Reserve Bank of New Zealand Chief Economist Paul Conway said that the interest rate decision in late October is “wide open” even as inflation pressures build.

The RBNZ raised its Official Cash Rate twice in the third quarter, then surprised some observers in its September statement by signaling a desire to evaluate the effects of those consecutive hikes. That communication led traders to pare back expectations for an additional 25 basis point increase at the October meeting to a little more than 60%.

Warsh Speech: Cautious Tone, Hawkish Backdrop

Kevin Warsh’s latest remarks were assessed as moderately less impactful than prior communications but still framed within a hawkish policy setting. His speech received a 5.6/10 score on the FXS Speechtracker, slightly below the established 6.1/10 baseline, pointing to a somewhat softer influence on markets even as the overarching message on policy remained largely unchanged.

Warsh acknowledged being “over-scarred from the global financial crisis,” highlighting an enduring focus on financial stability. At the same time, he pointed to structural growth and an upswing in investment attributed to “good policies,” reinforcing a guardedly hawkish view on activity, employment, and inflation heading into the October and December meetings.

He also emphasized artificial intelligence as a force on the demand side and drew attention to tail risks, as well as the upcoming AI field hearing. Together, these elements underpinned a forward-looking stance that avoided committing to a precise policy path for the remainder of 2026.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to 127.51, keeping the perceived policy tone firmly on the hawkish side. The combination of a stable and elevated index with a slightly lower FXS Speechtracker score suggested that markets continued to see the Fed as leaning toward tighter policy, even as Warsh underlined data dependence and risk management.

Indicator / Measure	Latest Reading	Prior / Baseline	Implication
US PPI (YoY, September)	6.3%	5.6% (August, revised from 5.4%)	Largest rise since 2022; above 5.3% expectation
Fed hike probability (later this month)	27.7%	–	Markets see modest chance of additional tightening
FXS Speechtracker – Warsh speech	5.6/10	6.1/10 baseline	Slightly less impactful tone vs historical norm
FXS Fed Sentiment Index	127.51	Change: 0.00 points	Overall policy tone remains firmly hawkish

NZD/USD Technical Picture: Rebound Within a Bearish Framework

From a technical standpoint, NZD/USD continues to exhibit a mildly bearish bias on the daily chart despite the latest bounce. The pair is trading below the 100-period moving average and under the upper Bollinger Band, keeping upside attempts constrained.

Prices are hovering just above the middle Bollinger Band, pointing to some short-term stabilization. However, the 14-period Relative Strength Index stands at 46.5, below the neutral 50 level, indicating that the current recovery lacks strong bullish momentum.

Key technical levels are outlined as follows:

Level	Type	Zone
0.5635	Support	Middle Bollinger Band
0.5560	Support	Lower Bollinger Band
0.5710	Resistance	Upper Bollinger Band
0.5780	Resistance	100-period moving average

As long as NZD/USD stays beneath resistance near 0.5710 and the 100-period moving average at 0.5780, advances are likely to be viewed as corrective within a broader downbeat configuration rather than the start of a durable uptrend. On the downside, 0.5635 and then 0.5560 are seen as important support zones.