As of December 19, 2024, the New Zealand dollar (NZD) has fallen to 0.5620 against the US dollar (USD), marking its lowest point since October 2022. This decline is primarily driven by a robust USD and deteriorating economic indicators from New Zealand. Following the Federal Reserve's December meeting, expectations of fewer rate cuts in 2025 have bolstered the USD, contributing to a 2.3% drop in the NZD on December 18, 2024 [43df1a39].
The economic situation in New Zealand has worsened, with the country's GDP contracting by 1.0% in the third quarter of 2024, following a 1.1% decline in the previous quarter. This has resulted in an annualized GDP shrinkage of 1.5%, a significant deterioration from a 0.5% contraction earlier [43df1a39]. As concerns over a potential recession grow, there are increasing calls for aggressive monetary easing by the Reserve Bank of New Zealand (RBNZ) to stimulate the economy [43df1a39].
In the context of these developments, the NZD's performance has been further impacted by external factors, including ongoing US-China trade tensions and the effects of former President Trump's tariff policies, which continue to exert pressure on the currency [3f9f347a]. Additionally, the RBNZ is under pressure to adjust its monetary policy, with expectations of a 50 basis point cut looming on the horizon [6c622af7].
Technical analysis suggests that the NZD may continue to decline, with potential targets set at 0.5500 and 0.5454 if current trends persist [43df1a39]. As the global economic landscape evolves, the interplay between domestic conditions in New Zealand and international market dynamics will be crucial for the NZD's trajectory moving forward.