U.S. Dollar struggles to regain momentum
New Zealand’s dollar softened as inflation data bolstered expectations for RBNZ rate cuts, while markets remained cautious on U.S. trade policy rhetoric.

Trump’s tariff rhetoric draws attention but lacks immediate market impact.
New Zealand inflation stayed at 2.2% year-on-year, above expectations.
The U.S. dollar’s recent pullback has shown signs of slowing, but it has yet to mount a convincing rebound. Markets remain cautious as they navigate mixed economic signals and geopolitical risks.
President Donald Trump’s continued focus on tariffs has attracted attention, though market reaction has been muted. On Tuesday, Trump reiterated his intention to impose a 10% tariff on Chinese imports and hinted at targeting the European Union with similar measures. He characterized tariffs as the “only way” to achieve trade fairness.
Despite the rhetoric, investors appear to be taking a wait-and-see approach, awaiting concrete policy moves. Key dates on the horizon include February 1, when decisions on tariffs for Canada, Mexico, and China are expected, and April 1, when reviews of broader trade measures are set to conclude. Until then, Trump’s comments are viewed as more bluster than actionable policy, leaving markets largely unfazed.
New Zealand inflation data fuels case for rate cuts
The fourth-quarter inflation data supported expectations for further monetary easing by the Reserve Bank of New Zealand (RBNZ). With inflation comfortably within the central bank’s target range, policymakers appear poised to move interest rates closer to neutral.
Consumer prices rose 0.5% quarter-on-quarter in the final three months of 2024, aligning with forecasts, while the annual rate held steady at 2.2%, just above the anticipated 2.1%. This marks the second consecutive quarter with inflation near the midpoint of the RBNZ’s 1-3% target band, reinforcing the view that the central bank has room to cut rates without stoking price pressures.
A 50-basis-point reduction at the RBNZ’s next meeting on February 19 is now widely expected. However, the pace of additional easing beyond February remains uncertain and will hinge on domestic inflation trends. In particular, policymakers are likely to monitor non-tradeable inflation closely, as the impact of declining tradeable goods prices diminishes.