NZD/USD holds positive ground above 0.5950 as China’s Q2 GDP grows 5.2%

NZD/USD gains traction to around 0.5980 in Tuesday’s Asian session.
China’s GDP grew 5.2% YoY in Q2, stronger than expected.
Investors brace for the US CPI inflation data for June due later on Tuesday.

Lallalit Srijandorn FXStreet

The NZD/USD pair remains firm near 0.5980 during the Asian trading hours on Tuesday. The New Zealand Dollar (NZD) edges slightly higher against the US Dollar (USD) after the release of Chinese economic data. The attention will shift to the US Consumer Price Index (CPI) inflation data for June, which will be published later on Tuesday.

Data released by the National Bureau of Statistics (NBS) on Tuesday showed that the Chinese economy grew at an annual rate of 5.2% in the second quarter (Q2) of 2025, compared to a 5.4% growth in Q1. This figure came in stronger than the expectation of 5.1%. Meanwhile, the Chinese Gross Domestic Product (GDP) rate rose 1.1% QoQ in Q2 after advancing 1.2% in the previous quarter, above the market consensus of 0.9%.

Additionally, China’s Retail Sales increased by 4.8% YoY in June versus 5.6% expected and 6.4% prior. The Industrial Production arrived at 6.8% YoY in June, compared to a 5.6% estimate and May’s reading of 5.8%. The stronger-than-expected Chinese economic data fails to boost the China-proxy Kiwi as traders prefer to wait on the sidelines ahead of the US CPI inflation data on Tuesday.

The US CPI data will take center stage later on Tuesday. This report might offer cues about the future path for US interest rates. Economists expect US inflation to have picked up slightly last month due to the impact of US President Donald Trump's tariffs. If the report shows a hotter-than-estimated inflation outcome, this could boost the USD and act as a headwind for the pair.

New Zealand Dollar FAQs

What key factors drive the New Zealand Dollar?

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.

How do decisions of the RBNZ impact the New Zealand Dollar?

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.

How does economic data influence the value of the New Zealand Dollar?

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.

How does broader risk sentiment impact the New Zealand Dollar?

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

FXStreet

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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