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NZD: NZD Rises Following Broad USD Weakness, NZ Mfg PMI Jumps Higher

NZD
USNew ZealandNorth AmericaBulletAPACForeign Exchange BulletsMarkets
  • The NZD/USD rose 0.58% on Thursday, to 0.5675 after the USD saw broad weakness following yields falling on the US PPI data, while the move continued following headlines that new reciprocal tariffs to be announced by President Trump would not go into effect today. We trade at the highest levels for the week, however still remain within recent ranges.
  • Looking at key levels, the pair has largely trading between the 20 & 50-day EMAs for the past month, a break of the 50-day at 0.5697 is needed to see momentum shift, the RSI trading wrapped around 50, while the MACD indicator is neutral. To the downside a break below 0.5600 (Feb 12 lows) is needed to test the multi-year lows made on Feb 3 of 0.5516.
  • The NZ-US 2yr swap continues to hovering near multi-year lows, Jan saw it rise over 30bps, however we have since given back about 20bps of that move to last trade at -83bps.
  • New Zealand's manufacturing sector expanded for the first time in nearly two years, with the PMI rising to 51.4 in January from 46.2 in December, signaling growth after a prolonged downturn. The data suggests the economy is responding to lower interest rates, following last year’s recession. The RBNZ having started rate cuts in August, is expected to lower the OCR by another 50bps next week to 3.75%. Notably, new orders rose above 50 for the first time since August 2022, with all five sub-indexes in expansion territory.
  • Expiries - 0.5580 (NZD308.9m). Upcoming notable strikes: 0.5450 (NZD1.71b Feb. 19), 0.5800 (NZD854.4m Feb. 19), 0.5650 (NZD525m Feb. 19)
  • Focus now turns to the RBNZ next week. RBNZ dated-OIS is pricing in a 89% chance of a 50bps cut, with a further 25bps cut priced in for April, and a cumulative 122bps of cuts priced in by Nov 2025.
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  • The NZD/USD rose 0.58% on Thursday, to 0.5675 after the USD saw broad weakness following yields falling on the US PPI data, while the move continued following headlines that new reciprocal tariffs to be announced by President Trump would not go into effect today. We trade at the highest levels for the week, however still remain within recent ranges.
  • Looking at key levels, the pair has largely trading between the 20 & 50-day EMAs for the past month, a break of the 50-day at 0.5697 is needed to see momentum shift, the RSI trading wrapped around 50, while the MACD indicator is neutral. To the downside a break below 0.5600 (Feb 12 lows) is needed to test the multi-year lows made on Feb 3 of 0.5516.
  • The NZ-US 2yr swap continues to hovering near multi-year lows, Jan saw it rise over 30bps, however we have since given back about 20bps of that move to last trade at -83bps.
  • New Zealand's manufacturing sector expanded for the first time in nearly two years, with the PMI rising to 51.4 in January from 46.2 in December, signaling growth after a prolonged downturn. The data suggests the economy is responding to lower interest rates, following last year’s recession. The RBNZ having started rate cuts in August, is expected to lower the OCR by another 50bps next week to 3.75%. Notably, new orders rose above 50 for the first time since August 2022, with all five sub-indexes in expansion territory.
  • Expiries - 0.5580 (NZD308.9m). Upcoming notable strikes: 0.5450 (NZD1.71b Feb. 19), 0.5800 (NZD854.4m Feb. 19), 0.5650 (NZD525m Feb. 19)
  • Focus now turns to the RBNZ next week. RBNZ dated-OIS is pricing in a 89% chance of a 50bps cut, with a further 25bps cut priced in for April, and a cumulative 122bps of cuts priced in by Nov 2025.