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NZ dollar stays supported, but yield gains may cap upside
OCBC says the NZD’s outperformance was helped by a June jump in New Zealand manufacturing PMI to 59.7 and hawkish RBNZ guidance, but NZ yields may have limited room to rise near term.
OCBC strategists Christopher Wong and Sim Moh Siong said the New Zealand dollar has remained supported after stronger New Zealand manufacturing data and hawkish commentary from the Reserve Bank of New Zealand reinforced expectations for further policy tightening, according to FXStreet.
They noted that New Zealand’s manufacturing PMI rose to 59.7 in June, its highest level since July 2021, which helped lift the NZD. The broader message was constructive for the currency, but the strategists cautioned that upside driven by yield support may be constrained in the near term.
OCBC added that markets already price the RBNZ as the most hawkish G10 central bank, with about 80 basis points of additional tightening expected by mid-2027. That pricing would take the OCR to around 3.3%, broadly aligned with the RBNZ’s estimate of the neutral rate near 3.25%.
The strategists said any material further rise in NZ yields may wait for clearer evidence of stronger domestic growth and a more supportive energy backdrop. Until then, they expect the NZD’s gains to face limitations from the yield outlook.