The New Zealand dollar hovered around $0.59 on Friday, consolidating after a 1.3% gain in the previous session driven by a sharp pullback in the US dollar. The greenback weakened amid reports of Japanese intervention in currency markets and data underscoring the resilience of the US economy.
Monetary policy tightening by the Reserve Bank of New Zealand is still anticipated. However, markets have scaled back the probability of a May rate hike to below 30%, from more than 60% earlier in the week, after Governor Anna Breman noted that first-quarter core inflation measures remained stable within the central bank’s 1–3% target range. A rate increase in July, however, is fully priced in.
Gains in the kiwi have been tempered by soft domestic indicators, with consumer sentiment and business confidence dropping to multi-year lows. Geopolitical tensions have also added to investor caution, as President Trump has maintained a naval blockade of Iranian ports until a nuclear agreement is achieved. Despite these headwinds, the New Zealand dollar advanced 2.8% in April, snapping two consecutive months of declines.