FX.co ★ New Zealand Dollar Rebounds

The New Zealand dollar experienced an uptick to approximately $0.601, recovering after a two-day downturn. This movement aligns with growing market speculation that the Reserve Bank of New Zealand (RBNZ) is anticipated to start increasing interest rates later this year. Market focus is now directed towards the upcoming labor market data, scheduled for release this week. Expectations for the fourth-quarter unemployment rate suggest a steady figure of 5.3%—the highest since 2016—accompanied by an anticipated 0.3% growth in employment. Although the data might suggest postponing policy tightening until the latter half of the year, persistent inflation above target and strengthening economic growth strongly indicate that the next policy adjustment will be an interest rate hike. The policy meeting on February 18 will be the first under the leadership of new Governor Anna Breman, who will likely present her strategic policy direction. However, gains were restricted due to a renewed vigor of the US dollar, following President Donald Trump’s nomination of Kevin Warsh as the Federal Reserve Chair. This decision is perceived by markets as hawkish, potentially reducing the likelihood of further aggressive rate cuts.