NZDUSD jumps above 0.58800!

• NZDUSD up ~0.88% today
   
• RBNZ cuts rates to 4.25%
   
• Three cuts this year, total 125 bps
   
• NZ Inflation at 2.2%, lowest since March 2021
   
• Focus on upcoming US PCE reading

The NZDUSD jumped about 0.88% today, breaking a 5-day losing streak against the US Dollar.

The move came after the RBNZ's expected decision to cut interest rates by 50 basis points from 4.75% to 4.25% yesterday, Tuesday 26th.

So far, New Zealand's central bank has cut interest rates three times this year, bringing the total easing this cycle to 125 basis points.
 

RBNZ Governor Adrian Orr has hinted at another large rate cut in early 2025 if economic conditions remain within the expected trajectory.

On the macroeconomic front, in the third quarter of 2024, New Zealand's annual inflation rate fell to 2.2% - the lowest since March 2021 (3.3% in the previous quarter).

At the same time, the country's economic activity remains sluggish, with output still below potential and employment growth expected to remain subdued until mid-2025.

As inflation approaches the midpoint of the central bank's 1-3% target range, coupled with weaker GDP and labor market performance, the committee is gaining confidence in the prospect of further easing monetary policy constraints.

The markets are now focusing on the PCE reading that will be released later today, and given its importance, it could affect the Dollar against its peers.

US PCE is the price index known as the Fed's preferred inflation gauge. Core PCE is expected to come in at 0.3% MoM (previous – 0.3%)