18.08.202502:26:53UTC+00New Zealand Dollar Rises

The New Zealand dollar climbed to approximately $0.593 on Monday, yet remained within its recent bands as the market anticipated the Reserve Bank of New Zealand’s policy decision scheduled for this week. The markets have fully factored in a 25 basis points reduction, which would decrease the official cash rate to 3%, thus extending the cumulative easing cycle to 250 basis points. Investors are also considering the potential for an additional cut to 2.75% in the early part of next year, with significant focus on the Reserve Bank's revised rate projections. Analysts have observed that the current policy positions are nearly neutral and that the effects of previous cuts are still unfolding, though weak economic growth and available capacity might warrant further reductions. The two-year swap rates are currently hovering near their lowest levels since early 2022, making them susceptible to any unexpectedly hawkish developments. In economic developments, New Zealand’s services sector contracted again in July, highlighting persistent economic fragility. Traders are also closely monitoring China’s rate decision and Federal Reserve Chair Jerome Powell’s upcoming address at the Jackson Hole symposium for indications of U.S. monetary policy direction, as well as a significant U.S.-Russia meeting that could influence market risk sentiment.