- The New Zealand Dollar edges higher in Friday’s Asian session.
- The hotter Chinese CPI inflation data and lower expectations of the RBNZ interest rate cut support the Kiwi.
- A stronger US Dollar might cap the pair’s upside.
The New Zealand Dollar (NZD) trades in positive territory on Friday. The latest upbeat Chinese economic data spurs another bullish run for the Kiwi. It’s worth noting that any signs of recovery in the Chinese economy generally lift the NZD as China is New Zealand's largest trading partner. Furthermore, a stronger-than-expected New Zealand employment report earlier this week threw cold water on expectations of the Reserve Bank of New Zealand (RBNZ) interest rate cut in the near term, which might continue to underpin the Kiwi in the near term.
On the other hand, the renewed demand for the US Dollar (USD) might cap the upside for NZD/USD as the recent US Initial Jobless Claims ease some fears about the US labor market. Additionally, the heightened geopolitical risks in the Middle East could weigh on riskier assets like the Kiwi and create a headwind for NZD/USD.
Daily Digest Market Movers: New Zealand Dollar gains momentum amid hotter Chinese inflation data
- China’s Consumer Price Index (CPI) climbed 0.5% YoY in July, compared to a 0.2% increase in June, hotter than the expectations of a 0.3% rise, the National Bureau of Statistics of China reported on Friday.
- On a monthly basis, Chinese CPI inflation came in at 0.5% MoM in July versus -0.2% prior, beating the estimation of 0.3%.
- Chinese Producer Price Index (PPI) declined by 0.8% YoY in July, at the same pace as seen in June. The figure was above the market consensus of -0.9%.
- According to RBNZ's latest monetary conditions survey, the two-year inflation expectations fell from 2.33% seen in Q2 2024 to 2.03% in Q3 of this year. The average one-year inflation expectations declined to 2.40% in Q3 versus 2.73% seen in Q2.
- The US Initial Jobless Claims for the week ending August 3 rose by 233K, compared to the previous week of 250K (revised from 249K), the US Department of Labor (DoL) reported on Thursday. This figure came in below the consensus of 240K.
- Continuing Claims increased by 6K to 1.875M in the week ended July 27, beating the estimation of 1.870M.
- Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee said on Thursday that the Fed needs to see more than payrolls and more than one month.
- Richmond Fed President Thomas Barkin noted that cooling in the US labor market is coming from slower hiring rather than a rise in layoffs, giving the Fed time to figure out its next move.
- Kansas City Fed President Jeffrey Schmid said on Thursday that lowering monetary policy would be "appropriate" should inflation continue to come in low, per Reuters.
Technical Analysis: New Zealand Dollar remains bearish in the longer term
The New Zealand Dollar trades stronger on the day. However, the bearish stance of the NZD/USD pair prevails on the daily chart, with the price remaining below the key 100-day Exponential Moving Average (EMA). Nonetheless, the RSI hovers around the 50-midline, suggesting a potential for consolidation cannot be ruled out.
The 100-period EMA near 0.6050 could act as a potential upside barrier for NZD/USD. If the price manages to break above this level, it would indicate the possibility of further upside. The next hurdle is seen at 0.6112, the upper boundary of the Bollinger Band.
On the downside, the initial support level emerges at 0.5912, a low of August 6. Further south, the additional downside filter to watch is the 0.5850-0.5840 region, representing a low of April 19 and the lower limit of the Bollinger Band.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -1.25% | -0.21% | -1.10% | -1.61% | -1.18% | -1.59% | -0.74% | |
| EUR | 1.22% | 1.03% | 0.14% | -0.37% | 0.09% | -0.34% | 0.50% | |
| GBP | 0.21% | -1.04% | -0.90% | -1.40% | -0.94% | -1.38% | -0.53% | |
| CAD | 1.09% | -0.14% | 0.89% | -0.47% | -0.05% | -0.48% | 0.37% | |
| AUD | 1.59% | 0.36% | 1.38% | 0.49% | 0.46% | 0.02% | 0.86% | |
| JPY | 1.23% | -0.11% | 0.92% | 0.09% | -0.38% | -0.45% | 0.41% | |
| NZD | 1.57% | 0.34% | 1.37% | 0.48% | -0.02% | 0.41% | 0.85% | |
| CHF | 0.72% | -0.51% | 0.52% | -0.37% | -0.87% | -0.41% | -0.85% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD accelerates losses to 1.0930 on stronger Dollar
The US Dollar's recovery regains extra impulse sending the US Dollar Index to fresh highs and relegating EUR/USD to navigate the area of daily troughs around 1.0930 in the latter part of Friday's session.
GBP/USD plummets to four-week lows near 1.2850
The US Dollar's rebound keep gathering steam and now sends GBP/USD to the area of multi-week lows in the 1.2850 region amid the broad-based pullback in the risk-associated universe.
Gold trades on the back foot, flirts with $3,000
Gold prices are accelerating their daily decline, steadily approaching the critical $3,000 per troy ounce mark as the Greenback's rebound gains extra momentum and US yields tighten their retracement.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.