New Zealand Dollar: Kiwi vulnerable to softer data – Commerzbank

Commerzbank’s Volkmar Baur notes that the New Zealand Dollar has recovered about 2 cents since the latest rate hike, with markets now effectively pricing in nearly one additional hike by year-end. However, weaker June retail sales and still-subdued consumer sentiment lead him to a more pessimistic economic view, suggesting the kiwi could suffer if expectations are revised lower.

Rate expectations versus retail weakness

"The New Zealand kiwi has gained about 2 cents since last week’s central bank meeting and is currently trading above 0.58 against the USD again."

"Considering that one hike has already occurred, the market has effectively priced in nearly an entire additional rate hike."

"However, the debit and credit card usage data for June - which was released yesterday - shows that this outlook may be somewhat overoptimistic."

"In the core rate (excluding spending on cars and gasoline), sales fell slightly by 0.1% in the second quarter compared to the previous quarter, marking the first decline since Q1 2025."

"If our view prevails, the kiwi is likely to suffer as a result."