The NZD/USD pair is trading positively at around 0.5820 during the Asian session on Thursday. This rise is happening as the US Dollar weakens due to a government shutdown. The shutdown resulted from the President and Congress not reaching an agreement, leading to the suspension of the weekly Initial Jobless Claims report. In September, the US private sector lost 32,000 jobs, but yearly wages increased by 4.5%. This has raised expectations that the Federal Reserve will lower interest rates two more times this year. Additionally, the US payrolls data came in below the expected increase of 50,000.

Factors Influencing the NZD

In New Zealand, the Reserve Bank’s cautious approach may put pressure on the Kiwi against the USD. Forecasts indicate that the Reserve Bank may cut rates twice more by March next year, depending on how fast the economy recovers. The value of the New Zealand Dollar is affected by the country’s economic health, the economy of its trading partner China, and dairy prices. Macroeconomic data and overall market sentiment also play a role in shaping the NZD. When investors feel optimistic, the NZD often strengthens. However, in uncertain times, it may weaken as people gravitate towards safer investments. Remember, this information is for informational purposes and should not be seen as investment advice. Following the US government shutdown on October 1, 2025, the US Dollar is experiencing immediate weakness, pushing the NZD/USD pair above 0.5800. We’ve seen similar patterns before, such as during the 35-day shutdown in late 2018 and early 2019, which created prolonged uncertainty for the dollar. A key issue in the upcoming weeks is the data blackout. Without important reports like Nonfarm Payrolls, the market lacks guidance, leading to greater implied volatility in currency options. Traders should prepare for larger price fluctuations and higher option premiums for major USD pairs as uncertainty becomes the main focus.

Anticipated Market Dynamics

The poor private payrolls data from September, which showed a decrease of 32,000 jobs, strengthens the belief that the Federal Reserve may need to cut interest rates. This shutdown contributes to economic challenges, making additional rate cuts this year more likely. Interest rate derivatives will probably continue to forecast significant easing from the Fed through the end of 2025. However, we must also consider that the Reserve Bank of New Zealand has its own cautious stance, with predictions of further rate cuts ahead. This could limit how high the Kiwi can rise against the dollar, as both central banks seem to be in an easing phase. This situation may create opportunities for range-trading strategies within the NZD/USD pair. Typically, a US government shutdown is a risk-off event that weakens commodity currencies like the NZD. For now, the USD’s weakness is the more significant factor, but we need to monitor global risk sentiment indicators like the VIX. If fears in the market increase dramatically, it could lead to a flight to safety, which could strengthen the dollar and reverse recent gains by the Kiwi. Create your live VT Markets account and start trading now.

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