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NZD/USD gathers strength above 0.5750 on easing US-China trade tensions

  • NZD/USD gains ground to near 0.5770 in Monday’s early Asian session. 
  • The Trump-Xi Jinping meeting on Thursday will be in the spotlight. 
  • The Fed is widely anticipated to cut rates at the upcoming October 28-29 meeting. 

The NZD/USD pair attracts some buyers to around 0.5770 during the early Asian session on Monday. The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) on renewed optimism around US-China trade talks. Investors will closely monitor the meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea later on Thursday.

US Treasury Secretary Scott Bessent said on Sunday that the US has reached a framework agreement with China to avoid imposing an additional 100% tariff on Chinese imports. A US Treasury spokesperson noted that the first day of talks had been "very constructive." 

A positive outcome for the talks would remove roadblocks for a meeting on Thursday between Trump and  Xi Jinping in South Korea. Easing concerns over a trade war between the world’s two largest economies could boost the China-proxy Kiwi, as China is a major trading partner for New Zealand. 

The US Federal Reserve (Fed) is widely expected to cut its benchmark interest rate by 25 basis points (bps) at the upcoming October meeting. This would be the second consecutive reduction, following a similar move in September 2025. The anticipated dovish shift is expected to weigh on the Greenback and act as a tailwind for the pair. 

On the Kiwi front, the Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate (OCR) by 50 basis points (bps) to 2.5% at the October meeting, which was a larger cut than expected. The RBNZ stated that it remains open to further rate cuts if needed to help the economy and inflation return to its target.  

New Zealand Dollar FAQs

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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