NZD/USD: A lower beta to AUD – ING

The New Zealand dollar has shown resilience compared to its Australian counterpart, as markets see less tariff risk for NZ. Despite the RBNZ’s dovish stance—potentially delivering up to 75bp in cuts—NZD is behaving like a lower-beta version of the AUD in response to trade headlines, ING’s FX analysts Francesco Pesole and Chris Turner note.

NZD shields itself better than AUD amid tariff risks

"Markets have consolidated the view that the New Zealand dollar is not as exposed to tariffs as AUD. That’s due to Australia’s largest reliance on China demand. New Zealand exports more than Australia to the US in GDP terms (2.2% vs 0.9%), but both countries were only hit by the base 10% tariff rate even before the 90-day pause." 

"The Reserve Bank of New Zealand remains very open to cutting rates again. We expect either 50bp or 75bp of additional easing, with a bias towards 75bp as the Bank has shown much more focus on growth than inflation."

"Front-end rates aren’t affecting FX much anyway. We expect NZD to continue trading as a lower beta version of AUD when it comes to trade headlines."