FX.co ★ New Zealand Dollar Gains on Softer US Dollar

The New Zealand dollar appreciated for the second consecutive day, reaching approximately $0.574 on Thursday. This upward movement was primarily due to a general weakening of the US dollar. The American currency faced downward pressure as the Federal Reserve anticipated potential rate cuts. Additionally, escalating trade tensions between the US and China, coupled with the ongoing federal government shutdown, have raised significant concerns about the US economic prospects. Despite these factors, the potential gains for the New Zealand dollar were restrained by a cautious monetary policy outlook domestically. Reserve Bank of New Zealand's Chief Economist, Paul Conway, emphasized on Wednesday that the central bank remains open to further monetary easing, although it will wait to evaluate incoming economic data before taking any definitive action. Current market trends are anticipating another rate reduction in November, with forecasts suggesting rates could decrease to 2.0% by 2026. Further supporting this expectation, the latest figures indicate that New Zealand’s yearly food inflation dropped to a five-month low of 4.1% in September, down from 5.0% in August.