NZD/USD to 0.55275 by October 28: the Fed-hold case

The New Zealand dollar/US dollar rate (NZD/USD) reaches 0.55275 by October 28, 2026 in the base case, 0.57195 in the bull case and 0.54635 in the bear case. The base case is a Federal Open Market Committee (FOMC) hold that leaves the September median funds rate of 4.1 per cent live for December.

The October 2 fix was 0.55915, the low of the Reserve Bank of New Zealand (RBNZ) B1 window from 0.57195 on September 21. Half of that 0.01280 range is 0.00640, so the base case is 0.55275. The funds range is 3.75 to 4 per cent after a 12–0 rise on September 16. The Summary of Economic Projections (SEP) median for the end of 2026 is 4.1 per cent. Four signals below would break the thesis.

Key Levels:

• NZD/USD: 0.55915 on October 2, 2026 — RBNZ B1 fix on October 2, seen October 5
• Base case target: 0.55275 by October 28, 2026 — half of 0.01280 under the fix, if a further hike stays live
• Bull case target: 0.57195 — September 21 high, if that further hike is retired
• Bear case target: 0.54635 — the full 0.01280 under the fix, on a 25-basis-point hike
• Major support: 0.55915 — October 2 low
• Major resistance: 0.56625 — September 28 fix, lost at 0.56405 on September 30
• Invalidation level: daily close above 0.57195 — the September 21 high

How the 0.55275 level is measured

Spot is the RBNZ B1 rate of 0.55915 on October 2, 2026, a WM/LSEG 14:00 fix. Consulted on October 5, the table still ended that day and the homepage matched it. The range is 0.57195 minus 0.55915, or 0.01280, and half of that off the fix is 0.55275. The bear case subtracts the whole gap. The bull case is the high. Funds, the SEP median and the September 2 cash rate are the policy inputs. Yields are B2 and the Treasury curve. The broad dollar is H.10 and futures are the September 29 report. The step is a ruler, not a fitted model.

Related:EUR/CAD to 1.6122 by October 29: the rate-gap case

What the fixes, the dots and the futures book show

NZD/USD is US dollars per New Zealand dollar. The Wellington fix fell from 0.57195 on September 21 to 0.55915 on October 2, down 2.24 per cent, and the 17-currency Trade Weighted Index (TWI) fell from 64.68 to 63.81, or 1.35 per cent. From September 21 to September 25 the broad dollar index rose from 119.4014 to 120.3300, up 0.78 per cent on the September 28 H.10, while that sheet's kiwi rate eased from 0.5719 to 0.5667. The US two-year was 4.83 per cent on October 2 against a New Zealand two-year of 3.84 per cent, a 99-basis-point gap. The ten-year gap was only 23 basis points, 5.28 against 5.05. The base case of 0.55275 by October 28, 2026 is the fix minus half the range if the FOMC holds and leaves 4.1 per cent standing.

Sources: RBNZ B1, RBNZ B2, the Treasury par yield curve, H.10 and the September 16 FOMC statement. The OCR and funds comparisons follow from each stated 25-basis-point rise.

The Official Cash Rate (OCR) of 2.75 per cent against the 3.875 per cent funds midpoint is a gap of 112.5 basis points. In the Commodity Futures Trading Commission (CFTC) report for September 29, asset managers were net short 21,228 contracts and leveraged funds only 1,066, with open interest at 114,777. Saxo's Ole Hansen put the prior week's sale at 21,900 contracts, about USD 1.3 billion, the largest since 2018.

"The median participant judges that the appropriate federal funds rate to be 4.1 percent at the end of this year, and to remain there next year. Inflation risks are to the upside while labor risks are roughly balanced."

— Kevin Warsh, Chairman, Federal Reserve (September 16, 2026 press conference transcript)

Why a hold can still lean against the kiwi

A hold does not retire the dollar's carry. The SEP median for end-2026 is 4.1 per cent, up from 3.8 per cent in June and 22.5 basis points over today's midpoint. 12 of 18 participants sit at 4.125 per cent, four at 4.375 per cent and two at 3.875 per cent. One more quarter point would hit the largest cluster. The FOMC calendar, re-opened on October 5, shows October 27–28 with no new projections and December 8–9 as the next one. Chairman Warsh offered no dot of his own. He said stopping required confidence that inflation was moving to 2 per cent clearly and fast enough, and that this test had failed. Left until December, that stance is 64 pips from 0.55915 to 0.55275. It is the same hinge as the US 10-year call into this meeting.

On September 2 the Committee raised the OCR by 25 basis points to 2.75 per cent and said it may need to rise further. June-quarter inflation was 4.1 per cent. The RBNZ homepage lists the next inflation update for 3:00pm on October 22 and a review for 2:00pm on October 28. This note does not pick that OCR. RNZ says ASB looks for two further rises before Christmas, the route to 0.57195 if the Fed calls September enough. A quarter-point Fed hike is the route to 0.54635. The Dow Jones note reads the same decision for equities.

Where the half-range rule fails

Those 10 sessions may already be the whole response to September 16, so a hold could die between 0.55915 and 0.56625. H.10's 0.5667 is a New York noon rate and is not spliced onto the fix. The September 2 rise did not stop the window ending at 0.55915. A base case of 0.6000 by September 30, in the third-quarter NZD/USD note, has passed, and October 2 is 0.04085 below it. Leveraged funds are barely short, so invalidation is a price. The sterling–kiwi note is not an input.

"The fact that the largest oil price shock in recent history hasn't derailed recovery is significant, but growth remains narrow and the oil shock has added more hurdles."

— Kim Mundy, Chief Economist, ASB (RNZ, October 5, 2026)

What would invalidate this call

The base case to 0.55275 breaks if any one of these four fires.

• A daily close above 0.57195, the September 21 high. An intraday spike does not count.
• The October 28 statement drops "Inflation remains elevated," or the chair says his September test is met. December would then no longer be a live hike.
• The US two-year closes at or below 4.46 per cent before October 28, the October 2 one-year yield.
• The OCR rises to 3.00 per cent on October 28 and the next B1 fix prints above 0.56625. The kiwi leg would then have set the price.

What to watch before October 28

Minutes follow three weeks after a decision, so September's minutes fall on October 7. The inflation update is listed for 3:00pm on October 22. October 27–28 is the FOMC, decision on the second day, with no new dots. December 8–9 brings the next projections, and October 28 is also the cash-rate review at 2:00pm. A close through 0.57195, or a fix at 0.55275 or 0.54635, settles it. The daily Treasury check is the two-year at 4.83 per cent, with 4.46 per cent as the break. The October 9 futures release covers October 6. The forex desk stays on the Wellington fix.

TL;DR

NZD/USD is called at 0.55275 by October 28, 2026, from the October 2 fix of 0.55915, with 0.57195 bull and 0.54635 bear. Half the September 21 to October 2 range comes off the fix if the FOMC holds in October and the 4.1 per cent median leaves a later hike live. The US two-year was 99 basis points above New Zealand's on October 2. A daily close above 0.57195 kills the lower target. A quarter-point hike switches the call to 0.54635.

FAQ

What is the NZD/USD base case into the October FOMC?

It is 0.55275 by October 28, 2026, the October 2 fix of 0.55915 minus half the range to 0.57195. It needs a hold at 3.75 to 4 per cent with the 4.1 per cent median still allowing a later hike. The bull case is 0.57195 if that hike is dropped. The bear case is 0.54635 on a 25-basis-point hike that day. All three use the Wellington fix.

Which rate is the spot in this note?

The spot is 0.55915, the RBNZ B1 rate for October 2, 2026, also on the Bank's homepage with that date. On October 5 the table had no later row. Since May 2015 the series has been the WM/LSEG 14:00 fix. H.10 printed 0.5667 on September 25 and is not an input to the targets.

What would a daily close above 0.57195 mean?

It would invalidate the base case. The price is the September 21 high used to measure the range, and it is the bull-case target. The call looks for 0.55275 if the Fed holds without retiring a later hike. A close above that high says the map is wrong. An intraday print that does not close there does not qualify.

Does this note forecast the October 28 cash-rate review?

No. The date is the review the RBNZ homepage lists for 2:00pm on October 28, 2026. September 2 raised the OCR by 25 basis points to 2.75 per cent and said it may need to rise further. That is not an October call. A rise to 3.00 per cent matters here only if the next fix prints above 0.56625.

How does futures positioning affect the call?

On September 29 asset managers were net short 21,228 New Zealand dollar futures and leveraged funds were net short 1,066. Open interest was 114,777. The institutional short supports a lower fix only while it remains. It does not set the 0.55275 target. A sharp cut in that short before October 28 would weaken the base case even if the Fed holds.

This article is informational analysis only and is not financial, investment, or trading advice. Foreign-exchange, commodity, and equity markets are highly volatile and can lose substantial value rapidly. Leveraged products carry total-loss risk and may exceed the initial margin posted. Past performance and historical correlations do not guarantee future results. Do your own research and consult a regulated financial adviser before making any investment decision.