FX.co ★ New Zealand Dollar Weakens

The New Zealand dollar declined to approximately $0.586 on Monday, stumbling after a brief recovery from a four-month low in the previous session. This decline was influenced by a dovish outlook from the Reserve Bank of New Zealand (RBNZ). Last week, the RBNZ reduced the official cash rate by 25 basis points to a three-year low of 3%, hinting at further rate reductions to bolster the struggling economy. In response, Prime Minister Christopher Luxon criticized the central bank for not lowering rates more decisively to spur growth. On the economic data front, retail sales increased by 0.5% quarter-on-quarter for the three months ending in June. This represented a slowdown from a 0.8% rise in the first quarter but exceeded projections of a 0.2% increase, indicating that lower interest rates are starting to have a positive effect on economic activity. Concurrently, the New Zealand dollar found support last week, recovering from its lowest level since April 11. This was due in part to the weakening of the US dollar, as Federal Reserve Chairman Jerome Powell highlighted emerging downside risks to the labor market, suggesting the potential for future rate cuts.