Key points:
The New Zealand dollar experienced a decline of 0.6%, dropping to $0.6103 following the RBNZ’s rate cut of 50 basis points, bringing the official cash rate to 4.75%.
This rate cut marks the second consecutive reduction by the central bank, with the previous one being a quarter-point cut in August.
The decision also removed the prior stance of maintaining restrictive policy for an extended period, signalling that future rate adjustments would rely on the bank’s ongoing economic evaluation.
Picture: NZD/USD continuing its downward trend as it approaches critical support near 0.6090 on the VT Markets app.
NZD/USD closed at 0.60892, showing a decline of 0.80% during the session. The pair saw little recovery from its high of 0.61407, settling near its low of 0.60882.
The downward trend has remained consistent over the past sessions, reflected in the price continuing to trade below all key moving averages.
Traders are now turning their attention to the November meeting, where there is an 80% probability priced in for another cut of the same scale. This leaves rates forecast to reach around 3.0% by the close of 2025.
With technical indicators pointing to persistent bearish momentum, the NZD/USD may continue to face downward pressure unless there is a strong shift in market sentiment.
Traders may remain cautious as the pair hovers near key support.
In case you missed it: Aussie Hits 2-Month High Against Yen, Kiwi Struggles
Meanwhile, the contrast between monetary policies in New Zealand and Australia became more evident. The Reserve Bank of Australia (RBA) is widely anticipated to keep its rates steady at 4.35%, with futures pricing indicating a 50% chance of a cut in December.
This divergence between the two nations’ central banks provided tailwinds for the Australian dollar.
As a result, the Aussie gained 0.5% against the Kiwi dollar, rising to NZ$1.1047. However, it faces resistance at NZ$1.1055, a level that could present a challenge in the short term.
Against the US dollar, the Australian dollar remained relatively stable at $0.6743. However, it had dropped 0.2% during the previous session, hitting a three-week low of $0.6713 as falling commodity prices dampened sentiment.
The Australian dollar’s performance often mirrors trends in China, given Australia’s reliance on commodity exports. Currently, China’s latest stimulus measures appear to have lost momentum, cooling expectations of a strong recovery, which in turn influences the Australian dollar’s movements.
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