On Monday, the New Zealand dollar climbed to approximately $0.574 as it sought to recover from a six-month low. This movement followed indications from President Trump suggesting a possible retreat from his extensive tariff threats against China. Nevertheless, the market maintained a cautious stance, carefully watching for any developments and the potential economic repercussions involving the globe's two largest economies.
Last week, the Kiwi faced significant downward pressure after an unexpected move by the Reserve Bank, which implemented a larger-than-anticipated rate cut. The central bank lowered its benchmark interest rate by 50 basis points to 2.50%, marking the lowest rate in over two years. The policymakers pointed to growing concerns about the economy's precarious outlook and hinted at the possibility of further rate cuts. Supporting this perspective, the most recent Purchasing Managers' Index (PMI) revealed that the services sector has been in contraction for more than 18 months. As a result, investors are now predicting a strong likelihood of an additional rate reduction during the central bank's meeting in November, with some anticipating rates to decrease to 2.0% in the coming year.
