New Zealand Dollar retains gains above 0.5550 as uncertainty surrounds New Zealand election

• Around 0.5560, NZD/USD trades higher in early Asian dealing on Monday.
• Preliminary election results give New Zealand’s governing coalition a narrow majority.
• October’s US employment growth substantially exceeded expectations.

Around 0.5560, NZD/USD is gaining in Monday’s early Asian session as investors weigh central bank policy and the initial outcome of New Zealand’s general election. Later in the day, China is due to publish its Consumer Price Index (CPI) inflation report.

A wafer-thin majority for Prime Minister Christopher Luxon’s National-led coalition emerged from the preliminary results. With so little separating the rival political blocs, however, a small shift in the final count could still leave the left-wing opposition able to form the next government.

With 67 seats in an enlarged 131-seat parliament, New Zealand’s incumbent right-leaning bloc currently has only a slender advantage. Certainty will have to await the Electoral Commission’s final official results on 27 November. Even then, talks to form a coalition could continue for weeks before a government takes office.

October’s US Nonfarm Payrolls (NFP) increased by 165,000, up from 60,000 in September and above the market consensus of 65,000. The Unemployment Rate edged lower to 4.1%, against expectations of 4.2%. These stronger employment figures could support the US dollar, putting pressure on the pair.

According to the CME FedWatch tool, traders raised the probability of a further quarter percentage point rate increase at the Federal Open Market Committee (FOMC) meeting on 8–9 December to 79.6%.

RBNZ surprise sharpens scrutiny of RBA as New Zealand and Australia diverge

Attention is turning to the RBA after the RBNZ’s unexpected decision, with Rabobank’s strategists observing that “last week’s decision by the RBNZ to leave rates unchanged blindsided a market that was priced for a hike,” which has “led to some soul searching ahead of this week’s RBA decision.” According to the bank, the RBNZ recognised at its policy meeting that “annual inflation is expected to increase to 4.4% in the December quarter (largely on the back of fuel),” while emphasising that “domestic demand remains subdued.”

In comparing the two economies, Rabobank describes New Zealand’s performance as “very different” from Australia’s, noting that the country has “only emerging from recession in late 2024 to an unbalanced performance last year.” The bank identifies “some strong green shoots for New Zealand in Q1 2026,” although it warns that these emerged “ahead of the headwinds caused by the Iran war.” In that context, its conclusion is that “the shock of last week’s RBNZ policy decision has underpinned some concerns over the signals that RBA Governor Bullock may provide this week.”

Technical Analysis: NZD/USD stays bearish below the 100-day SMA

Trading below both the 20-day simple moving average at the centre of the Bollinger Bands and, by a wider margin, the 100-day moving average, NZD/USD retains a bearish bias on the daily chart. The lower Bollinger Band is being tested and provides initial support. Meanwhile, the Relative Strength Index (14), at roughly 34, is climbing out of oversold territory, but continues to signal subdued demand rather than a clear bullish reversal.

The 20-day Bollinger mid-line, around 0.5635, provides the nearest resistance. Above it lie the upper band near 0.5725 and the 100-day moving average at 0.5755. Together, these levels form a substantial supply zone that the pair would need to regain to relieve downward pressure. Initial support sits at the lower Bollinger Band at 0.5545; a sustained breach would open the way to fresh lows and prolong the existing downtrend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)