During the European trading session on Monday, the New Zealand dollar/US dollar steadily rose, with an intraday report of 0.6026, up 0.48%. In terms of product structure, the operating income of 10-30 billion yuan products was 401/1288/60 million yuan, respectively.

The New Zealand second-quarter employment data exceeded expectations, leading to a reassessment of rate cuts and subsequent bullish trends for the New Zealand dollar against the US dollar. Subsequently, the possibility of a rate cut increased, and market pricing indicates that the Reserve Bank of New Zealand will cut rates by 25 basis points this month. Market pricing also suggests that there will be two similar rate cuts before year-end.

On the other hand, analysts believe that interest rates will remain stable at 5.5%, which may be correct because the inflation rate has not yet consistently reached the Reserve Bank of New Zealand's target of 1-3% and remains significantly higher than the target of 2.0%. Non-trade inflation, including housing and construction costs, has hardly slowed down, remaining at a high level of 5.4%. However, a rate cut this month may be reasonable or at least may be a move to cut rates earlier rather than later. A survey conducted by the central bank shows that inflation expectations from 1 to 10 years have significantly declined, with the 2-year inflation expectation monitored closely by the Reserve Bank of New Zealand approaching the target of 2.0% from the previous 2.33%. Public opinion is also optimistic that the battle against inflation has been won.

Macro-economic data increased the possibility of rate cuts.

In addition, quarterly GDP data recovered in the three months ending in March, albeit at a growth rate of only 0.2%, which was lower than pre-epidemic levels. Unfortunately, according to PMI data, manufacturing suffered its biggest blow since 2021 in July, and the latest data for the service sector was also disappointing.

In terms of the labor market, although the second-quarter data was unexpectedly optimistic, the unemployment rate has been trending upward for the fifth consecutive quarter, reaching its highest level in three years. In addition, although quarterly wage growth was unexpected, the annual growth rate fell to a two-year low of 3.6%, and working hours decreased by 1.2% compared to the previous quarter. By the middle of 2025, the Reserve Bank of New Zealand expects the unemployment rate to continue to rise to 5.1%.

The next updates for inflation and employment data will be in October and November, respectively, which has led some to doubt whether the Reserve Bank of New Zealand has enough patience to wait until the end of this year to ease its policy, given that discussions in the United States about bold rate cuts of 50 basis points in September are heating up. The first action policy makers may take is to modify their statement in May that rates will be higher for a longer period of time, or to bring forward the rate cut schedule from the previously expected March 2025 to 2024.

"The U.S. Securities and Exchange Commission (SEC) and other regulatory agencies are concerned about this incident and may conduct a deeper examination of NYSE's operations and crisis management mechanisms. Market analysts expect that such technical failures may prompt regulatory agencies to strengthen their supervision and requirements for exchange technology infrastructure."

If the interest rate remains stable, or the rate cut is 25 basis points, and the upcoming meeting sends a more aggressive signal for rate cuts, this may put pressure on the New Zealand dollar/US dollar, pushing the currency pair to 0.5900 if the 20-day simple moving average (SMA) is proven to be weak. Alternatively, in the case of firm non-trade inflation, the Reserve Bank of New Zealand could maintain its hawkish tone by temporarily holding interest rates steady and lowering rates by less than investors expect before the end of the year. In this case, the currency pair may rise and re-test the 50-day and 200-day moving averages in the 0.6060-6080 range, or even higher, with bullish investors possibly challenging the key resistance zone of 0.6147-0.6173.

It is worth noting that US CPI and retail sales data are also on the agenda this week and may exacerbate market volatility. At 20:25 Beijing time, the New Zealand dollar/US dollar was reported at 0.6028/30, up 0.52%.

In contrast, due to the stickiness of non-trade inflation, the Reserve Bank of New Zealand maintains a tough stance and keeps interest rates unchanged for now. The magnitude of the interest rate cut before the end of the year is lower than investors' expectations, so the currency pair may rise and challenge the 50-day and 200-day moving averages in the 0.6060-6080 area, or even higher. Bulls may also challenge the key resistance zone of 0.6147-0.6173.

It is worth noting that US CPI and retail sales data are also on the agenda this week, which may intensify market volatility.

(NZD/USD daily chart source: Epsilon)

At 20:25 Beijing time, the New Zealand dollar/US dollar was reported at 0.6028/30, up 0.52%.