FX.co ★ New Zealand Dollar Holds at Over 3-Week High

The New Zealand dollar has been trading around $0.583, hovering near its highest point in over three weeks, driven by a weaker US dollar amidst escalating trade tensions between the United States and the European Union. This comes as investors keenly anticipate Europe's reaction, which is slated for discussion in an emergency meeting on Thursday. This follows President Trump's threat to levy additional tariffs on several European partners if an agreement regarding Greenland's acquisition is not achieved.

Domestically, a streak of positive economic data indicates that New Zealand’s economic recovery is accelerating, bolstering expectations that the Reserve Bank of New Zealand (RBNZ) might implement monetary tightening later this year. Market analysts currently perceive almost no likelihood of a rate change in February; however, the probability of an interest rate hike by July has climbed to over 50%. All eyes are now on the fourth-quarter Consumer Price Index (CPI) report due on Friday, with the annual rate anticipated to reach 3%, the upper limit of the RBNZ's target range of 1–3%. A stronger-than-expected figure would strengthen the case for raising interest rates. In parallel, Prime Minister Luxon has declared that a national election is scheduled for November 7.