The New Zealand Dollar (NZD) went up slightly during early European trading on Friday, nearing 0.5830. However, its movement is limited by the previous day’s range, showing there isn’t much upward momentum. The US Dollar is under pressure due to moderate risk appetite, sparked by worries about a possible US Government shutdown and a slowing job market. According to the US Challenger Job Cuts report, layoffs fell to 54,064 in September from 85,979 in August. Hiring plans also dropped to 204,939 for the year, marking the lowest level since 2009.

Comments from Dallas Fed President Lorie Logan

Dallas Fed President Lorie Logan’s remarks challenged fears about further rate cuts in the US. Still, many believe the Federal Reserve will cut rates soon, limiting any rallies in the USD. In New Zealand, attention is on the Reserve Bank, which may ease monetary policy to encourage economic growth. Additionally, the performance of China’s economy and dairy prices are crucial for the NZD since China is New Zealand’s top trading partner and the country depends on dairy exports. The RBNZ aims for an inflation rate of 1%-3% and adjusts interest rates as needed. Economic indicators, such as growth and unemployment in New Zealand, significantly influence the NZD. The currency typically strengthens when market risk is low and optimism is high. As of today, October 3, 2025, the New Zealand dollar is showing some strength against the US dollar, but it’s stuck in a narrow range. This indicates indecision in the market, with neither currency having a clear upper hand. Traders might look to strategies that benefit from low volatility or a potential breakout from this constrained trading. The US dollar’s softness stems from the ongoing government shutdown and a weakening labor market. The September 2025 jobs report confirmed this trend, with non-farm payrolls at just 150,000, far below the expected 180,000. This information supports the idea that the Federal Reserve may cut interest rates in its next meeting.

The Complex Situation for the US Dollar

However, the Fed’s direction isn’t certain, creating a complex scenario for the US dollar. Although the market anticipates rate cuts, the latest CPI data shows core inflation remains high at 3.5% year-over-year. This tension between a slowing economy and persistent inflation means we should be ready for sudden policy changes. At the same time, the Kiwi faces challenges that could limit its gains. The market expects the Reserve Bank of New Zealand to ease its policy to fight slow domestic growth, especially after a disappointing 0.2% GDP growth in Q2 2025. This circumstance makes it hard to maintain a long-term bullish view on the New Zealand dollar. External factors also weigh on the Kiwi, especially from its main trading partners. China’s Caixin Manufacturing PMI for September 2025 dropped to 49.8, signaling a slight contraction, while the recent Global Dairy Trade auction saw whole milk powder prices fall another 1.5%. These signs suggest New Zealand’s export-focused economy is under significant external pressure. Given these mixed factors, we expect the NZD/USD pair to struggle for direction in the coming weeks. We might consider options strategies like straddles to prepare for a potential volatility spike around central bank meetings. Range-trading strategies with tight stop-losses could also work well until a clear, stronger trend develops. Create your live VT Markets account and start trading now.

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