FX.co ★ New Zealand Dollar Drops After Weak GDP Report

On Thursday, the New Zealand dollar dropped to $0.591, continuing its decline from the previous session following GDP figures that were weaker than anticipated. New Zealand's economy contracted by 0.9% in the quarter ending in June, surpassing the predicted 0.3% downturn, after a revised 0.9% growth in the first quarter. On an annual basis, GDP fell by 0.6%, contrary to forecasts which anticipated no change. The economic slowdown was widespread, with the construction sector remaining in decline and manufacturing negatively impacted due to a reduction in goods exports, influenced by US tariffs. Market expectations now suggest about 58 basis points of rate cuts by the Reserve Bank of New Zealand, an increase from the 48 basis points expected before the GDP figures were released. Additionally, there is a 20% probability of a more significant 50 basis point reduction at the October meeting. Meanwhile, in the United States, the Federal Reserve reduced interest rates, as was largely anticipated, while indicating a cautious strategy toward further monetary policy easing.