New Zealand’s kiwi faces pressure as June retail sales decline and consumer sentiment remains subdued, challenging rate hike expectations.
The New Zealand dollar has recovered roughly 2 cents since the latest rate hike, trading above 0.58 against the USD. Markets are pricing in nearly one additional rate increase by year-end, following the recent move by the central bank.
However, June retail sales data showed a 0.1% decline in core spending, excluding cars and gasoline, marking the first drop since Q1 2025. Consumer sentiment also remains weak, raising doubts about the economic outlook and the sustainability of further rate hikes.
Analysts warn that if expectations for additional tightening are revised lower, the kiwi could come under renewed pressure.