At the start of October, the probability of another 25 bps hike at the RBNZ meeting on 29th November was close to 60%. The probability at the end of October was close to zero percent. 

The entire curve now has less than 10 bps worth of hikes priced which suggests if the hard data starts to weaken, we could see rate cut expectations build. If that were to materialise before the US economy starts to weaken as we expect (before year-end) then further NZD/USD declines are likely. 

NZD/USD downside momentum should fade as US economic activity starts to slow more clearly, marking a turning point for NZD/USD.

NZD/USD – Q4 2023 0.58 Q1 2024 0.61 Q2 2024 0.62 Q3 2024 0.62