FX.co ★ Kiwi Dollar Dips from Multi-Month Highs

The New Zealand dollar fell to $0.608 on Tuesday, shedding some of the gains made in the previous session and slightly pulling back from its multi-month highs. Investors are now closely examining trade uncertainties, particularly focusing on the global repercussions of U.S. tariff policies as the 90-day tariff reprieve is set to conclude next week. Mitigating further losses was the softer U.S. dollar, influenced by concerns about the U.S. fiscal outlook and increasing expectations for more significant Federal Reserve rate cuts. This sentiment is fueled by dovish signals from policymakers and persistent political pressure. In parallel, private data indicated that China's manufacturing sector has returned to expansion, contrasting with official reports that showed factory activity contracted for the third consecutive month. This development has alleviated some worries about potential risks to New Zealand exports due to the countries' strong trade relationship. On the domestic front, the Reserve Bank of New Zealand is anticipated to maintain its current stance at the July 9 meeting, with market swaps indicating only a 23% chance of a 25 basis point cut to 3%.