New Zealand dollar edges higher as China eases tariffs, but domestic data disappoints
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Daily Currency Update
The New Zealand Dollar (NZD) edged higher against the US Dollar (USD) on Wednesday, with NZDUSD trading near US$0.5662 at the time of writing. The NZD's recovery was supported by improving global trade sentiment after China announced plans to suspend part of its tariffs on US agricultural goods, a move that lifted overall risk appetite and supported commodity-linked currencies. Beijing’s Ministry of Finance said that, starting November 10, it would suspend 24% tariffs on selected US imports for one year, while a 10% tariff on other products would remain in place. The decision, seen as a goodwill gesture to ease trade tensions, has improved market sentiment across Asia-Pacific currencies. For New Zealand, whose economy is closely tied to Chinese demand for its agricultural exports, the news provided a modest but welcome boost. Despite this improvement in external sentiment, the NZD remains under pressure domestically following weaker-than-expected labour market data. Statistics New Zealand reported that the unemployment rate rose to 5.3% in the third quarter, up from 4.8% previously and marking the highest level since 2016. Meanwhile, employment growth was flat, signalling that the labour market is beginning to lose momentum amid tighter financial conditions and slower domestic demand. The figures reinforce expectations that the Reserve Bank of New Zealand (RBNZ) is likely to maintain a cautious stance in the coming months. While inflation remains above the central bank’s target range, the softening labour market provides further evidence that previous rate hikes are cooling the economy. Markets are now pricing in a prolonged pause in monetary tightening, with some analysts even suggesting that rate cuts could come into focus in 2025 if economic activity continues to weaken. Looking ahead, traders will be watching for fresh clues from US economic data, particularly inflation and employment reports, which could influence the direction of the USD and broader market sentiment. For now, the NZDUSD pair appears to be consolidating after recent declines, with near-term support seen around US$0.5630 and resistance near US$0.5700. While global trade optimism offers a short-term lift, New Zealand’s soft domestic data and cautious central bank outlook may limit the NZD's upside in the weeks ahead.Key Movers
In the US, attention remains firmly on the ongoing government shutdown, now stretching into its sixth week. The Senate’s repeated failure to approve a temporary funding measure has heightened the risk of the longest federal funding lapse in US history. The prolonged stalemate continues to weigh on investor confidence, with the US Dollar Index (DXY) hovering around 100.20 amid a cautious market mood. The uncertainty has also reshaped expectations for Federal Reserve policy. According to the CME FedWatch tool, markets now assign a 69% probability to a rate cut in December—down sharply from 90% a week earlier—as investors weigh political gridlock against signs of resilience in parts of the economy. Labour market data offered a modest upside surprise. The latest ADP report showed that private sector employment increased by 42,000 in October, comfortably beating forecasts of a 25,000 gain. The data followed a revised decline of 29,000 in September, suggesting that hiring activity has regained some traction despite broader economic headwinds. ADP chief economist Nela Richardson noted that private-sector hiring “resumed modestly” in October, while pay growth has remained steady for more than a year. The figures point to a labour market that, while cooling, continues to show signs of stability—offering the Federal Reserve some reassurance as it navigates the delicate balance between curbing inflation and sustaining employment amid fiscal uncertainty.Expected Ranges
- NZD/USD: 0.5550 - 0.5750 ▲
- NZD/EUR: 0.4800 - 0.5000 ▲
- GBP/NZD: 2.2950 - 2.3150 ▲
- NZD/AUD: 1.1400 - 1.1600 ▼
- NZD/CAD: 0.7900 - 0.8100 ▼