• The New Zealand Dollar is trading lower in most pairs as the country’s economic growth stutters. 
• Bearish technicals, showing a breakout from a price pattern, add fuel to the fire. 
• The US Dollar strengthens on strong data, pushing NZD/USD down a step lower.  

The New Zealand Dollar (NZD) is trading lower in most pairs, and is down by over half a percent against the US Dollar (USD) at just above 0.6000 on Friday, as a sluggish economic outlook weighs on the NZD. 

New Zealand Dollar hit by negative GDP

The New Zealand Dollar is undermined by negative growth in New Zealand. 

Recent data showed the New Zealand economy pitched into a technical recession in the fourth quarter of 2024. New Zealand Gross Domestic Product (GDP) shrank by 0.1% in Q4 when economists had expected a 0.1% rise, according to Statistics New Zealand. This followed a 0.3% contraction in Q3 – two quarters of negative growth mark a recession. 

Despite the dismal growth data, the Reserve Bank of New Zealand (RBNZ) has not said it is ready to cut interest rates to try to stimulate growth. Inflation still remains relatively elevated at 4.7% in Q4, even though it fell from 5.6% previously and is slowly trending lower. 

In an interview with Reuters this month, Reserve Bank of New Zealand Deputy Governor Christian Hawkesby said that interest rates, at a 15-year high of 5.5%, need to stay restrictive for some time.

Reuters places the consensus estimate for the RBNZ making an initial interest-rate cut in August. 

Recent comments from The New Zealand finance minister, Nicola Willis, however, suggest the government may wish for interest rates to come down to help stimulate growth. Growth would be “significantly slower” than previously expected, said the minister, as higher interest rates had already dampened economic activity. 

Part of the reason for the slowdown is China, which has experienced its own economic slowdown after years of stellar growth. China is New Zealand’s largest trading partner and a key market for New Zealand dairy goods, the country’s main export.