As of November 1, 2024, the New Zealand dollar (NZD) has experienced a significant decline, dropping by more than 4 US cents, or 6%, over the past month. The NZD is currently trading at US59.67 cents, down from US63.70 cents just a week prior, and it recently hit a 10-week low of US59.40 cents. This downturn is largely attributed to the strength of the US dollar and the resilience of the US economy [5bf8a5ac].
The US economy expanded at an annual rate of 2.8% in the third quarter of 2024, with consumer spending growing by 3.7%, the fastest pace in over a year. However, persistent inflationary pressures were highlighted by a 2.2% increase in the core Personal Consumption Expenditures (PCE) deflator [71107269]. The rise in US government bond yields amid pre-election uncertainty has further bolstered the dollar's strength, impacting the NZD negatively [5bf8a5ac].
In the context of the upcoming US elections, analysts are closely monitoring how a potential Trump victory could influence the NZD. The uncertainty surrounding the elections is contributing to fluctuations in the currency markets, with traders adjusting their positions based on expected outcomes [5bf8a5ac].
The immediate resistance for the NZD/USD pair is now set at 0.6000, with support levels identified at 0.5950 and 0.5910 [51bd97af]. The recent uptick in the NZD earlier in October, when it fell to 60.4 US cents, was driven by a decrease in annual inflation to 2.2% for the third quarter, raising expectations for aggressive rate cuts by the Reserve Bank of New Zealand (RBNZ) [daba6f59].
Concerns about China's economic recovery, New Zealand's primary trading partner, continue to impact the NZD's performance, particularly as the absence of a robust fiscal stimulus plan in China weighs on market sentiment [daba6f59]. Meanwhile, the Australian dollar (AUD) has shown more stability, reflecting a rise in consumer sentiment and iron ore prices [1f07951b].
As the NZD/USD exchange rate evolves, the interplay between domestic economic conditions and international market dynamics, particularly in light of the US elections, will remain critical for traders and investors alike. The Eurozone economy also showed growth, expanding by 0.4% in Q3, while the UK announced a GBP 40 billion tax increase, adding further complexity to the global economic landscape [71107269].