FX.co ★ NZ Dollar Holds Modest Gains but Remains Fragile

On Wednesday, the New Zealand dollar remained around $0.579, maintaining slight gains following the previous session. This stability comes amidst concerns about a potential US government shutdown, which has impacted the US dollar. Such a shutdown could postpone the release of critical US economic data, such as the September non-farm payrolls report, potentially complicating the Federal Reserve's policy decisions later this month. Despite these developments, the New Zealand dollar remains under pressure, hovering near a six-month low reached last week. This pressure is attributed to market expectations that the Reserve Bank of New Zealand will reduce its official cash rate by 25 basis points to 2.75% in its upcoming meeting, with a 35% probability of a more significant 50 basis points cut anticipated. Meanwhile, the most recent survey by ANZ Bank indicated that business confidence in New Zealand remained stable in September. However, a net 50% of businesses foresee better conditions on the horizon despite the current sluggish economy. The New Zealand dollar is also trading close to a three-year low against the Australian dollar, highlighting the contrasting monetary policy approaches between New Zealand and Australia.