New Zealand Dollar Extends Gains

The New Zealand dollar rose past $0.60 on Thursday, marking a third consecutive session of gains, benefitting from a softer US dollar. The greenback came under pressure amid renewed uncertainty over US trade policy, with President Trump reiterating his resolve to impose tariffs after the Supreme Court blocked many of his sweeping levies. The kiwi’s upside, however, remained limited by diminishing expectations of near-term policy tightening by the Reserve Bank of New Zealand. Last week, Governor Anna Breman said the economy has scope to recover this year without triggering inflationary pressures, signaling less urgency for an imminent rate hike. Her remarks came after the RBNZ held its cash rate steady and emphasized the need to keep policy accommodative. Investors now see small chance of a first rate increase until December.

The New Zealand dollar edged up to $0.597 but remained near a two-week low, amid reduced expectations that the Reserve Bank will cut interest rates in the near term. Last week, Governor Anna Breman said improving economic conditions should allow growth to pick up this year without reigniting strong inflationary pressures, suggesting less urgency for policy tightening. This comes after the central bank kept the cash rate unchanged, emphasizing that monetary policy will remain accommodative as inflation moves closer to the midpoint of its target band. Investors now see little chance of a first rate increase until October or December. Adding to market caution, President Trump's new 10% global tariff took effect on Tuesday, with his administration working to hike it to 15%.

The New Zealand dollar rose to around $0.599, rebounding from a two-week low, supported by a weaker US dollar amid trade risks. This followed President Donald Trump’s announcement to raise global tariffs from 10% to 15% after the Supreme Court struck down his “reciprocal” tariffs. Nevertheless, gains were limited by fading expectations of a near-term rate hike. Governor Anna Breman said the economy has room to recover this year without triggering excessive inflation, as pressures ease gradually, suggesting only a limited need for aggressive rate increases. The central bank recently held the cash rate steady, noting policy will remain supportive as inflation gradually approaches the midpoint of the target range. Breman added a rate hike later in 2026 is possible but not fully priced in. Meanwhile, unexpectedly strong Q4 retail sales showed the economy maintained momentum late in 2025, supporting the case for a rate hike later this year.