New Zealand’s manufacturing sales dropped by 2.9 percent in the second quarter, as reported by Statistics New Zealand. This decline follows a previous increase of 4.8 percent. Sales volumes for dairy and meat products—the country’s biggest export earners—fell by 4.8 percent.

Signs of Economic Slowing

The 2.9 percent decrease in manufacturing sales indicates that the economy is slowing down. This shift from the previous quarter’s growth suggests a weaker outlook for New Zealand’s gross domestic product (GDP), which might put downward pressure on the New Zealand dollar (NZD) soon. The trend of economic slowing seems to continue, as the latest BusinessNZ Performance of Manufacturing Index for August 2025 showed a contraction at 48.2. In the past, whenever we’ve seen weak data points like this, such as the slowdown in 2023, the NZD has not performed well. Therefore, it’s smart to think about strategies to profit from a drop in the NZD/USD exchange rate. The 4.8 percent decline in dairy and meat sales is particularly worrying, as global demand appears to be weakening. The latest results from the Global Dairy Trade auction in early September 2025 confirmed this trend, with the price index falling by another 1.5 percent. This further underscores the negative outlook for New Zealand’s key export revenues.

Interest Rate Outlook from RBNZ

This economic weakness may prompt the Reserve Bank of New Zealand (RBNZ) to reevaluate its approach to the Official Cash Rate. With the latest inflation rate showing a decrease to 3.8 percent—well below previous peaks—the reason for keeping rates high is fading. We’re monitoring interest rate futures, which now indicate a higher chance of a rate cut in early 2026. In light of this, buying NZD/USD put options set to expire in October and November 2025 seems like a wise move. This strategy helps us prepare for a potential decline in the currency while limiting risk. Additionally, selling out-of-the-money call options could help fund these puts, making for an affordable bearish position. Create your live VT Markets account and start trading now.

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