Coming up early in tomorrow’s early Asian session is the Reserve Bank of New Zealand’s rate decision for the last meeting of 2025 and Kiwi traders will be glued to their seats awaiting to see the central bank’s forward projections in regards their policy agenda.

Currently RBNZ’s official cash rate stands at 2.5% around levels once seen before in mid-2022, as RBNZ surprisingly slashed its benchmark rate by 50bps in the October meeting, amid worries that subdued domestic activity could jeopardize the slowdown of the long-needed economic recovery of the nation. Economic activity remains persistently weak (GDP contracted in Q3), primarily due to global supply constraints, inflation floats near the upper band of the central bank’s 1-3% target (yet is expected to ease to 2% within the next 6 months) and high unemployment rate clouds the picture.

In money markets, participants have already priced in the scenario where RBNZ slashes its overnight cash rate, however a dichotomy has emerged in regards for the magnitude of the cut. Approximately 90% of polled economists position themselves in the camp for 25bps rate reduction, whereas a 10% chance is assigned for a surprise, jumbo rate reduction.

At the end of the day however, the focus will invertedly fall upon the details of the bank’s forward guidance, as markets widely expect and speculate that this decision could mark the final rate cut of the ongoing easing cycle.

Stocks in New Zealand managed to extend their rally in the past few sessions, despite the global panic surrounding overextended tech valuations in Silicon Valley and are expected to benefit from looser financial conditions should the central bank decide to extend its easing cycle beyond tomorrow’s meeting and into 2026.

The Kiwi on the other hand is expected to extend its devaluation and cross below the trough formed during the Liberation Day back in April, given these extensively loose policy projections and net interest differential discrepancies created with its main counterparts.

Technical Analysis

NZDUSD Chart – The Kiwi extends its devaluation journey and edges closer to Liberation-Day bottom seen in April of 2025

Resistance: 0.5685 (R1), 0.5780 (R2), 0.5840 (R3)
Support: 0.5580 (S1), 0.5520 (S2), 0.5470 (S3)