New Zealand dollar rebounds, CPI projected to rise

[Ben Graham]

After a week of losses, the New Zealand dollar has bounced back on Friday. In the European session, NZD/USD is trading at 0.5978, up 0.80% on the day. The New Zealand dollar is down 2.2% in July and fell as low as 0.5904 on Thursday, its lowest level since June 23.

New Zealand releases the inflation report for the second quarter early on Monday. CPI is expected to rise to 2.8% y/y from 2.4% in Q1, which was the highest inflation rate since June 2024. Quarterly, CPI is expected to ease to 0.6% from 0.9% in Q1.

The Q1 inflation data was released in April and even though CPI was higher than expected, it did not prove a bar to lower interest rates, as the Reserve Bank of New Zealand trimmed rates by a quarter-point at the May meeting. This means that even if Monday's inflation is higher than expected, the Reserve Bank could decide to cut again at the Aug. 20 meeting.

The Reserve Bank held rates on July 9 in what was an expected move. The RBNZ has shown it can be aggressive and has cut rates by 225 basis points since August 2024, but will be hoping for greater clarity with regard to tariffs in order to chart a rate path.

The domestic economy could use relief in the form of a rate cut and ongoing global trade tensions are weighing on business and consumer confidence. US President Trump has threatened new tariffs on China, South Korea and Japan in August, and this could hurt New Zealand's economy as all four countries are among New Zealand's largest trading partners.

NZD/USD Technical

• NZD/USD has pushed above resistance at 0.5957 and is testing resistance at 0.5983. Above, there is resistance at 0.6009
• 0.5931 and 0.5905 are providing support

NZDUSD 1-Day Chart, July 18, 2025

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