Kiwi dollar steady as Chinese trade rebound supports kiwi but firm USD caps gains
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Daily Currency Update
NZD/USD is currently trading at US$0.5780 holding essentially unchanged from the previous day as the pair struggles to extend its recent rebound. While the New Zealand Dollar (NZD) continues to draw modest tailwinds from improving external data, firmer demand for the US Dollar (USD) is capping upside momentum and keeping the pair confined to a relatively tight range. The Kiwi’s latest support comes from Monday’s stronger-than-expected Chinese trade report, a data release that tends to carry outsized importance for New Zealand given its deep trade ties with Beijing. China reported a solid increase in its November trade surplus, underpinned by a 5.9% year-on-year rise in exports. This export rebound suggests global demand may be stabilizing after a prolonged period of weakness and offers a degree of reassurance for countries that rely heavily on China for trade flows. For New Zealand specifically, the numbers are constructive. China remains its largest trading partner, and any sign of renewed strength in Chinese external demand has direct implications for New Zealand’s key export industries, including dairy, meat, and other agricultural products. The improvement in China’s trade performance therefore bolsters the macroeconomic outlook for Wellington and helps sustain demand for the NZD, even as domestic economic conditions remain mixed. Despite these supportive external developments, the NZD faces headwinds from the broader USD environment. The US Dollar has regained modest strength as traders reassess expectations for Federal Reserve rate cuts in the coming year. While markets continue to anticipate some degree of policy easing from the Fed, recent commentary from policymakers and pockets of firmer US data have prompted investors to temper expectations for aggressive rate reductions. This shift has helped the USD stabilize following weeks of weakness and has slowed the NZD’s attempted recovery. The balance between external optimism and USD resilience has kept NZD/USD largely range-bound in the near term. Markets are now turning their attention to upcoming domestic indicators that may offer clearer direction for the pair. New Zealand’s growth backdrop has remained fragile, with elevated interest rates weighing on household activity and business confidence. Further signs of economic softness could limit the currency’s ability to capitalize on positive global signals. Even so, the medium-term outlook remains tied to developments in China, where improving trade momentum could help lift sentiment toward commodity-linked currencies such as the NZD. If Beijing can sustain its export recovery and domestic stimulus efforts gain additional traction, the Kiwi may find firmer footing. For now, however, the interplay between recovering external demand and a steadier USD suggests that NZD/USD will continue to trade cautiously within established ranges.Key Movers
The US Dollar stayed on the back foot Tuesday, even after a brief rebound on Monday, as traders turned their attention to the Federal Reserve’s upcoming policy announcement. With the US Dollar Index (DXY) still hovering near six-week lows, markets are clearly in “wait-and-see” mode, looking for clues on how quickly the Fed might begin cutting interest rates next year. Investors are particularly focused on three things at Wednesday’s meeting: the Fed’s updated dot plot, any changes in the economic outlook, and Chair Jerome Powell’s comments. While markets have been pricing in a series of rate cuts for 2025, Fed officials have recently sounded more cautious. That has created some tension between what investors hope to hear and what the central bank may actually signal. Fresh US labour data released Tuesday offered a mixed picture and didn’t do much to settle the debate. The latest numbers from ADP—tracking private-sector job growth—showed companies added an average of 4,750 jobs per week over the four weeks ending November 15. That’s not a weak number, but it does highlight a job market that is cooling gradually rather than expanding rapidly. The ADP data is known for its volatility, but the trend over recent months confirms a steady softening in hiring. At the same time, the JOLTS report for October showed job openings ticking up slightly to 7.67 million. This small rise was a surprise after several months of declines and hints that demand for workers hasn’t disappeared entirely. Still, the rest of the report—including hiring and quits—suggests the broader labour market continues to settle into a more balanced state after the exceptionally tight conditions of the last two years. These figures follow a run of data suggesting the US job market is past its peak and slowly losing momentum. Wage growth has eased, unemployment has edged higher, and payroll gains have become more moderate. For many investors, this reinforces the idea that the Fed will have room to cut interest rates in 2025. However, the central bank may not want financial conditions to loosen too quickly. If Powell strikes a firmer tone on Wednesday—reminding markets that inflation remains above target and that progress could be uneven—the Fed could push back gently against expectations for multiple cuts early next year. That would likely give the US Dollar some support. Until then, currency markets are drifting sideways as traders wait for clarity. The Fed’s communication is likely to set the tone for the dollar over the coming weeks and determine whether its recent softness marks a temporary pause or the start of a longer downward trend.Expected Ranges
- NZD/USD: 0.5700 - 0.5900 ▲
- NZD/EUR: 0.4850 - 0.5050 ▲
- GBP/NZD: 2.2950 - 2.3150 ▼
- NZD/AUD: 1.1400 - 1.1600 ▼
- NZD/CAD: 0.7900 - 0.8100 ▲