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NZD/USD: Market pricing aggressive RBNZ tightening path – BBH

FXStreetMay 6, 2026 12:26 PM
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Brown Brothers Harriman’s (BBH) Elias Haddad reports NZD/USD has rebounded toward 0.6000 on broad US Dollar (USD) weakness, nearly erasing war-related losses. New Zealand’s Q1 labour data were mixed, with softer employment but firm wage growth. Swaps now discount a full 25 bps Reserve Bank of New Zealand (RBNZ) hike in July and 125 bps over 12 months, though Haddad warns the RBNZ may ultimately deliver fewer hikes, posing a headwind to NZD.

Mixed data versus hawkish market pricing

"New Zealand Q1 labor market data was mixed."

"The RBNZ sectoral factor inflation model dipped to 2.7% y/y in Q1 vs. 2.8% in Q4 and the bank forecasts a negative output gap of -0.9% over 2026."

"The swaps market firmed up odds of a first full 25bps RBNZ rate hike at the July 8 meeting, and a total of 125bps of tightening over the next twelve months to 3.50%."

"The risk is the RBNZ delivers less rate increases than is currently priced in which is a headwind for NZD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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