Hawkish signals??? What drove Kiwi rally?

The New Zealand dollar staged an unexpected rally following the Reserve Bank of New Zealand's (RBNZ) latest interest rate decision. Analysts struggled to pinpoint a definitive hawkish signal in the central bank’s messaging.

Technical factors did support the rally, as NZD/USD broke above the 100- and 200-hour moving averages. However, sellers have tempered the upward movement at this level, signaling caution following the sharp rise.

One potential catalyst for the rally could be RBNZ's brief acknowledgment of potential upward price pressures linked to Trump tariffs. ANZ Bank, although forecasting a 25bps rate cut at the next RBNZ meeting, did lift their odds of a 50bp cut in February, given the Governor’s comments. However, the Central Bank explicitly downplayed concerns over these factors impacting its policy trajectory.