empty
24.04.2025 12:59 AM
The Kiwi Has a Decent Chance to Continue Rising

Inflation in New Zealand in Q1 came in slightly above expectations, rising from 2.2% to 2.5% year-over-year. This was mainly due to the goods sector, while core inflation is slowing in line with forecasts. Meanwhile, the factors driving the overall disinflationary process remain stable.

This image is no longer relevant

Economic indicators are not particularly encouraging either. Activity in the services sector remains below the expansion threshold, and optimism in the manufacturing sector has weakened. Spending on durable goods has declined for the third consecutive month, and consumer activity remains subdued, contributing to further inflation slowdown.

The combination of decelerating inflation, weak economic growth, and external uncertainty suggests that the Reserve Bank of New Zealand may lean toward cutting interest rates more quickly than expected. Notably, ANZ Bank now forecasts two additional rate cuts compared to earlier projections, with a minimum rate expectation of 2.5% instead of 3.0%. This is a more dovish outlook than before, and if ANZ is correct, the Kiwi is unlikely to develop sustained growth against the U.S. dollar and may complete its correction at some level before turning downward again.

That is unless the U.S. falls into a deep recession and the dollar loses some of its advantages as the world's primary reserve currency. So far, the Trump administration's actions lead in that direction—though the intended outcome was likely quite different.

The net short position on the NZD has decreased again, this time by $215 million to -$1.95 billion. Speculative positioning remains bearish, but the fair value remains above the long-term average with no signs of a reversal.

This image is no longer relevant

Fair value showed a trend shift in mid-January and continues to confirm it. The sharp drop on April 4 had no fundamental basis and was a reaction to a political event. Fundamentally, the Kiwi remains a favorite in the NZD/USD pair.

NZD/USD has reached strong resistance at 0.6030. From here, there may either be an attempt to move higher on the current momentum or a brief consolidation and correction followed by another upward push. The likelihood of a decline is considered low. A break and hold above 0.6030 seems more realistic, but for sustained growth to continue, there is still little foundation, especially given the high level of uncertainty and the commodity-linked nature of the New Zealand dollar.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Has Common Sense Prevailed? (High probability of #SPX growth and a drop in gold prices)

On Monday, the United States announced "significant progress" in trade talks with China following a two-day meeting in Switzerland over the weekend. Markets reacted to this news with a gap-up

Pati Gani 11:00 2025-05-12 UTC+2

GBP/USD. An Important Week for the Pound

The GBP/USD pair is again under pressure due to the broad strengthening of the U.S. dollar. Last week, the pound attempted to break into the 1.34 zone in reaction

Irina Manzenko 10:49 2025-05-12 UTC+2

The Market Will Face Reality

How quickly things change on the financial markets! Before America's Liberation Day, investors viewed the 10% universal import tariff as disastrous. Now, it's seen as the most favorable option

Marek Petkovich 09:18 2025-05-12 UTC+2

What to Pay Attention to on May 12? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Monday. Fundamental developments will also be limited, but at this point, it is entirely unclear which factors are influencing price formation. The pound

Paolo Greco 06:51 2025-05-12 UTC+2

EUR/USD. Weekly Preview. Prepare for Price Turbulence

The upcoming week promises to be volatile. First, the market will react to the results of the Geneva meeting between representatives of the US and China. Second, key reports

Irina Manzenko 05:34 2025-05-12 UTC+2

GBP/USD Overview – May 12: Business as Usual...

The GBP/USD currency pair moved slightly higher on Friday, although the British pound had no real reason to grow that day or throughout the week. Let us recall that

Paolo Greco 03:48 2025-05-12 UTC+2

EUR/USD Overview – May 12: The Dollar's Success Is Unstable

The EUR/USD currency pair slightly rebounded upward on Friday, and overall, it has been gradually sliding down for several weeks. The movement has been so sluggish that we recently classified

Paolo Greco 03:48 2025-05-12 UTC+2

US Dollar. Weekly Preview

The U.S. economic calendar for the upcoming week won't be overloaded with data. If we leave out the secondary reports, only April's Consumer Price Index (CPI) remains, which will

Chin Zhao 00:59 2025-05-12 UTC+2

British Pound. Weekly Preview

The wave pattern of the pound and the market's interest in the news currently reflect those of the euro. Last week, the market had a chance to reduce demand

Chin Zhao 00:59 2025-05-12 UTC+2

Euro Currency. Weekly Preview

Will the news background have any real significance in the upcoming week? In my opinion, the market seems largely uninterested in economic and fundamental data. Consider this: major events like

Chin Zhao 00:59 2025-05-12 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback