New Zealand dollar rises on business confidence, RBNZ hike

The New Zealand dollar strengthened against all major currencies on Thursday, buoyed by a business confidence surge and market pricing of further RBNZ rate hikes this year【3】.

Business confidence lifts the kiwi

The ANZ July business outlook survey recorded a 19.5‑point jump in confidence to 56.1, the highest in five months, while the activity outlook rose 12.4 points to 49.3【3】. The survey’s upbeat GDP recovery signal, combined with inflation still above the RBNZ’s 1‑3 % target range, reinforced expectations that the central bank will continue tightening. Swaps pricing now reflects a 60‑basis‑point hike by year‑end and a total of 100 bps of tightening over the next twelve months, targeting an OCR of about 3.50 %【3】.

Market pricing of RBNZ moves

Money‑market participants have already priced a 15 % probability of a further 50‑bp “jumbo” cut on 26 November, but the latest business data shift the odds toward additional hikes rather than cuts【1】. ING also expects a 25‑bp “insurance” hike to 2.50 % on 8 July, noting that oil price declines have narrowed the case for tightening, yet the central bank may still act to guard against de‑anchored inflation expectations【2】. Together, these expectations underpin the kiwi’s recent strength, even as New Zealand bonds underperform peers【3】.

Currency context

The NZD remains one of the weaker major currencies in 2025, but the recent rally narrows its gap to peers. The 0.61 USD level sits just above the 0.60 USD support identified in recent technical analyses, while 0.62 USD marks the next resistance hurdle. Should the RBNZ deliver the anticipated hikes, the kiwi could test the upper band; a hold or cut would likely see it retreat toward the support zone.

What to watch

• RBNZ OCR decisions on 8 July, 26 November, and the September and October meetings, especially any deviation from the market‑priced 60‑bps hike path.
• Further movements in the ANZ business confidence index, which could shift expectations for GDP growth and inflation.
• Swaps curve pricing for NZD‑linked interest‑rate swaps, a leading barometer of market‑priced tightening.

The kiwi’s rally reflects a convergence of stronger domestic data and market bets on continued RBNZ tightening. The key question now is whether inflation will stay anchored enough to allow the central bank to follow through on its tightening roadmap without triggering a sharp reversal in the currency.