FX.co ★ New Zealand Dollar Poised for Weekly Gain

The New Zealand dollar maintained its upward momentum, stabilizing around $0.582 on Friday. This strengthening is largely attributed to economic uncertainties and increasing expectations of interest rate cuts by the US, which have put pressure on the US dollar. On Thursday, Treasury Secretary Scott Bessent noted that the ongoing government shutdown could negatively impact US economic growth and affect American workers. Additionally, indications of weakness in the US labor market have bolstered the anticipation that the Federal Reserve will reduce rates in its two remaining meetings this year. The New Zealand dollar also gained from a reversal in short positions against the Australian dollar, after a significant eight-week increase that saw the Aussie reach its highest level in three years. Nonetheless, domestically, the NZ dollar faces challenges due to a series of weak economic data, prompting traders to anticipate more aggressive monetary easing by the Reserve Bank of New Zealand. The market has fully factored in a quarter-point rate cut to 2.75% next week, with a 44% likelihood of a more substantial half-point reduction. For the current week, the kiwi has risen approximately 0.8%, potentially ending a two-week decline.