The NZD/USD pair is declining to approximately 0.5655 during Tuesday’s Asian trading hours. The New Zealand Dollar (NZD) is weakening against the US Dollar (USD) largely due to the anticipated rate cuts from the Reserve Bank of New Zealand (RBNZ). Traders are also awaiting the release of the US September Nonfarm Payrolls (NFP) report on Thursday.
The RBNZ reduced its Official Cash Rate (OCR) to 2.5% at its October meeting, prompted by a larger-than-expected 0.9% contraction in New Zealand’s Q2 2025 Gross Domestic Product (GDP). A further 25 basis point (bps) cut to 2.25% is widely expected at the next meeting on November 26, 2025. The RBNZ has already implemented several rate cuts throughout 2025 to stimulate its struggling economy.
The outlook for aggressive RBNZ rate cuts is currently outweighing the positive news of the US rolling back tariffs on Kiwi exports. This scenario is expected to continue exerting downward pressure on the NZD, acting as a tailwind for the NZD/USD pair in the near term.
In a significant development, US President Donald Trump recently lifted tariffs on over 200 food products in response to rising US grocery prices. New Zealand welcomed this announcement on Sunday, which includes the removal of additional tariffs on various agricultural products such as beef, offal, and kiwi fruit. This tariff relief is estimated to benefit New Zealand exports by approximately NZ$2.21 billion (US$1.25 billion) annually.
Meanwhile, hawkish statements from Federal Reserve (Fed) policymakers are creating caution among traders and could potentially weigh on the USD. Kansas City Fed President Jeffery Schmid stated on Friday that monetary policy should counteract demand growth, noting that the current Fed policy is “modestly restrictive,” which he deems appropriate. This comes ahead of a significant release of US economic data.
