FX.co ★ Kiwi Dollar Hovers Near Five-Week High

The New Zealand dollar has been trading around $0.578, marking its highest point in more than five weeks. This strength is largely attributed to the anticipation that the Reserve Bank's cycle of easing has reached its conclusion. Recently, the central bank lowered rates by 25 basis points in line with expectations. However, their latest forecasts indicate a minimal likelihood for further rate cuts, with only a 20% chance of an additional reduction next year. This is largely due to easing inflationary pressures and an improving economic outlook. This perspective aligns with comments from newly appointed Governor Anna Breman, who highlighted that the recent rate cuts are aimed at bolstering growth and employment, although controlling inflation remains a crucial focus to safeguard the purchasing power of lower-income households. Consequently, the market is increasingly factoring in the possibility of a future rate hike by the central bank, although this is not expected until late 2026. The New Zealand dollar is also benefiting from a weaker US dollar, as markets forecast a Federal Reserve rate cut this week.