FX.co ★ New Zealand Dollar Rebounds

On Wednesday, the New Zealand dollar appreciated to $0.591, breaking a two-day losing streak, as the US dollar continued to weaken amidst increasing expectations of interest rate cuts by the Federal Reserve. Concerns about the US economy, particularly indications of a cooling labor market, have intensified speculation about a rate cut in September. Despite this, the gains for the New Zealand dollar, often referred to as the kiwi, may be constrained by underwhelming domestic economic indicators. Notably, New Zealand's unemployment rate edged up to 5.2% in the second quarter, a near five-year high, rising from 5.1% in the first quarter, yet it was slightly below the anticipated 5.3%. This data suggests ongoing softness in the labor market, which reinforces predictions that the Reserve Bank of New Zealand might reduce rates at its forthcoming meeting in August. Markets are currently factoring in a 90% probability of a 5 basis points cut, with possible further reductions to as low as 2.75% later this year or early next year. Additionally, the Trump administration has introduced 15% tariffs on New Zealand exports, effective August 7, which could further strain the country's export-reliant economy.