NZD/USD traded near 0.6040 during Asian trading on Monday, after small gains in the previous session. The pair stayed firm even after New Zealand’s Business NZ Performance of Services Index slipped to 50.9 in January from 51.7.
New Zealand inflation expectations moved higher, according to the Reserve Bank of New Zealand’s monetary conditions survey. Two-year expectations for Q1 2026 rose to 2.37% from 2.28%, while one-year expectations increased to 2.59% from 2.39%.
The US Dollar weakened after January CPI data came in below expectations. Headline CPI rose 2.4% year on year, down from 2.7% and under the 2.5% forecast. Monthly CPI eased to 0.2% from 0.3%.
Chicago Fed President Austan Goolsbee said rates are still likely to move lower, but any further easing will depend on services inflation. CME FedWatch showed close to a 90% chance of no rate change in March, up from 81% a week earlier. Markets are pricing in about two 25-basis-point cuts by year-end, with the first expected in June at roughly 52%.
The NZD is influenced by New Zealand economic data, RBNZ policy, China-linked demand, and dairy prices. It also tends to gain in risk-on markets and fall in risk-off periods.
We are focusing on the RBNZ inflation expectations survey from last month, which showed a clear rise in the two-year outlook to 2.37%. This more hawkish signal was supported by the Q4 2025 unemployment rate, released two weeks ago, which held steady at a tight 3.9%. Together, these numbers suggest the RBNZ has limited room to ease policy in the near term.
On the US side, January inflation cooled to 2.4%, which has already shifted market sentiment. That view strengthened after weak US retail sales for January, released last week, pointed to a softer consumer. The probability of a first Fed rate cut in June is now above 60%, up from about 52% just a few weeks ago.
Outside central bank policy, external factors are also helping the Kiwi. China’s latest manufacturing PMI for January moved back into expansion at 50.5, easing worries about demand from New Zealand’s largest trading partner. In addition, the Global Dairy Trade auction in early February posted another solid 2.5% price gain, supporting New Zealand’s export income.
With this policy and data gap widening, we expect NZD/USD to have more upside in the weeks ahead. Traders may look at June-expiry call options to target a move higher, or use bull call spreads to lower the upfront cost. If NZD/USD breaks above the 0.6150 resistance level, it could open the way toward the Q4 highs seen in 2025.
here to set up a live account on VT Markets now
