New Zealand Dollar/US Dollar struggles to hold the line under the dominance of a strong US Dollar — My observation

2025-9-11 09:45

The New Zealand dollar is really in an awkward position right now, facing the strong US dollar like a lone sheep in front of a pack of wolves. Those big institutions, like the analysts at Brown Brothers Harriman, coldly report that "the NZD is in a defensive position amidst the general strength of the USD," which is really an understatement! As I watch my NZD investments shrink, it’s not just as simple as being in a "defensive position."

Hawksby is making a big noise, it's almost driving away investors.

The attitude of the New Zealand Reserve Bank Governor, Christian Hawkesby, who insists on a dovish stance, leaves me quite helpless. He pretends to be calm and says, "OCR may drop to around 2.50% by the end of the year," but such statements are essentially telling everyone, "Don't touch the New Zealand dollar!" These central bank officials always speak ambiguously, saying things like "it could be faster or slower," and this kind of ambiguous attitude is truly maddening.

To be honest, I have no hope for the Federal Reserve meeting on October 8th. The market expects a 90% chance of a 25 basis point rate cut? I see it as a 100% certainty! A total rate cut of 50 basis points by the end of the year is almost a done deal, which is simply adding insult to injury for the New Zealand dollar.

That being said, I still hold some positions in NZD/USD. After all, global economic activity is not too bad, and the Federal Reserve's dovish stance is the only factor that can provide some support for the Kiwi dollar. But to be honest, unless the US dollar falls significantly, I am really not optimistic about the prospects for the Kiwi.

From a technical perspective, the NZD/USD is currently hovering around 0.58, which has dropped significantly compared to last year. I would rather invest in assets like Bitcoin, which still has a high of $117,000, rather than watching the NZD depreciate step by step. Or invest in gold, which has already risen to $3,868, with an increase of over 35% in a year!

These institutional analysts are really too optimistic, even saying things like "slight increase." The reality of the market is very harsh, and the recent performance of the New Zealand dollar is a good testament to that.

But in any case, this is the market. We can only recognize reality, adapt to the environment, and adjust our strategies. After all, there is no eternal bull market, nor is there an eternal bear market.