NZD/USD Tumbles Despite Rate Hike as US Jobs Report Takes Center Stage

The New Zealand dollar (NZD/USD) plummeted by 1.45% on Wednesday to around 0.5810, despite a 25 basis point increase in the Official Cash Rate (OCR) by the Reserve Bank of New Zealand (RBNZ). The central bank aimed to return inflation to its 2% midpoint while supporting growth and employment.

RBNZ Governor emphasized that moving now could reduce the risk of sharper rises later, but also kept future decisions contingent on medium-term inflation risks. This cautious approach led to a market reaction that was less enthusiastic than expected.

The focus is now shifting to the US August jobs report on Friday, which is forecasted to show 58K payroll growth and an unemployment rate of 4.1%. If the data beats expectations, it could lead to a rapid break below the immediate support level of 0.5800.