- NZD/USD edges higher after the Reserve Bank of New Zealand lowered interest rates by 25 basis points, as widely expected.
- The rate cut reflects the RBNZ’s response to easing inflation, slowing growth, and emerging signs of labor market strain.
- The US Dollar faced challenges after Trump signaled a willingness to engage in trade negotiations.
The NZD/USD pair edges higher after the Reserve Bank of New Zealand (RBNZ) cut interest rates by 25 basis points (bps), in line with market expectations. The pair is trading around 0.5540 during Wednesday’s Asian session. The central bank’s decision comes amid softening inflation, slowing economic growth, and early signs of labor market weakness. There is growing speculation that intensifying global trade tensions could prompt a deeper 50 bps cut, with markets pricing in the potential for up to 100 bps of additional easing in 2025.
The NZD/USD pair also found support following comments from US President Donald Trump, who expressed openness to negotiations with trade partners—sparking hopes for a potential de-escalation in global trade disputes. US Treasury Secretary Scott Bessent added that nearly 70 countries have reached out to the White House to discuss tariffs.
However, persistent US- China trade tensions continue to weigh on sentiment, particularly given New Zealand’s strong trade ties with China. Trump recently threatened to impose an additional 50% tariff on Chinese imports unless Beijing lowers its duties on US goods. In response, China condemned the move as "blackmail" and pledged to defend its economic interests.
Meanwhile, the US 10-year Treasury yield has climbed to around 4.37%, signaling stronger investor demand for returns amid the uncertainty surrounding global trade dynamics.
Looking ahead, traders will closely monitor this week’s US inflation data, which could significantly shape the outlook for future rate cuts. Additionally, attention will turn to the release of the FOMC Meeting Minutes later on Wednesday for further insight into the Federal Reserve's policy stance.
Economic Indicator
RBNZ Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after its seven scheduled annual policy meetings. If the RBNZ is hawkish and sees inflationary pressures rising, it raises the Official Cash Rate (OCR) to bring inflation down. This is positive for the New Zealand Dollar (NZD) since higher interest rates attract more capital inflows. Likewise, if it reaches the view that inflation is too low it lowers the OCR, which tends to weaken NZD.
Read more.Last release: Wed Apr 09, 2025 02:00
Frequency: Irregular
Actual: 3.5%
Consensus: 3.5%
Previous: 3.75%
Source: Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by Governor Adrian Orr’s press conference.
BRANDED CONTENT
The right broker can enhance your trading experience by offering key features suited to your strategy. Discover a curated list of brokers designed to meet various trading preferences.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops below 1.1400 after Germany and EU PMI data
EUR/USD struggles to hold its ground and trades below 1.1400 in the European session on Wednesday. PMI data from Germany and the Eurozone showed that the business activity in the service sector contracted in April. Markets await comments from central bankers and US PMI data.
GBP/USD stays weak near 1.3300 after disappointing UK data
GBP/USD stays under bearish pressure near 1.3300 in the European session on Wednesday. Pound Sterling struggles to find demand following the weaker-than-forecast April PMI data from the UK. BoE Governor Bailey will speak later in the day and the US economic calendar will feature PMI reports.
Gold price takes it on the chin after Trump softens tone on trade and Fed
Gold price is undergoing some profit-taking and sees selling pressure on Wednesday towards $3,300 at the time of writing. The profit taking picked up on comments from United States President Donald Trump, who did a 180-degree turn on his stance on China and the Federal Reserve (Fed). After the closing bell, Tesla’s (TSLA) Chief Executive Officer Elon Musk said he will reduce his role at the Department of Government Efficiency.
Dogecoin lead double-digit gains across meme coins, with Shiba Inu, PEPE and BONK skyrocketing to new monthly highs
Top meme coins Dogecoin, Shiba Inu, PEPE and BONK lead the meme coin sector with double-digit gains on Wednesday following the crypto market recovery.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.