The New Zealand Dollar (NZD) continues its downward trend as market focus shifts to the Reserve Bank of New Zealand's (RBNZ) inflation expectations. San Francisco Fed President Mary Daly hinted at further rate hikes without specifying the timing, with futures fully pricing in a December 9 increase. The RBNZ maintained its Official Cash Rate (OCR) at 2.75% on October 28, while US rates stand at 3.75%-4.00%, widening the gap to at least a full percentage point.
Preliminary results from New Zealand's November 7 election suggest a narrow majority for National, ACT, and New Zealand First, with nearly 400,000 votes remaining uncounted until November 27. A Labour victory could reintroduce employment into the RBNZ's mandate, potentially lowering rates amid an unemployment rate of 5.7%. The Business NZ manufacturing index fell to 54.9 in October from 56.5, reducing pressure on the RBNZ to align with the Fed's tightening stance.
Key economic data releases are on the horizon, including the Business NZ services index due at 21:30 GMT on Sunday, the RBNZ's Financial Stability Report at 20:00 GMT on Monday, and its quarterly survey of inflation expectations at 02:00 GMT on Tuesday, November 17. The NZD/USD pair has seen a steady decline, with the November 6 low marking the lowest point since late June. The pair has fallen in four of the last five sessions, with each bounce peaking lower than the previous one.
US economic indicators, such as producer prices and retail sales, will also influence market sentiment. Daly's speech at 17:00 GMT on Friday and October retail sales data on November 17 will factor into the Fed's December 9 decision. The NZD's performance remains tied to broader economic conditions, with dairy prices and China's economic health playing significant roles.