NZD/USD remains below 0.6200, receives downward pressure from Chinese economic concerns


  • NZD/USD receives downward pressure from the deteriorating economic outlook in its key trading partner, China.
  • Economists at Goldman Sachs and Citi have downgraded their GDP growth forecasts for China to 4.7% in 2024.
  • The US Dollar struggles due to increasing expectations of a 50 basis points Fed interest rate cut on Wednesday.

NZD/USD retraces its recent gains from the previous session, trading around 0.6190 during the Asian hours on Tuesday. The antipodean New Zealand Dollar (NZD) faces challenges due to growing concerns over the economic health of its key trading partner, China. Analysts point out that the latest round of weak economic data indicates serious challenges for the world's second-largest economy.

Economists at Goldman Sachs and Citi have reduced their 2024 Gross domestic Product (GDP) growth forecasts for China to 4.7%, falling short of Beijing's target of around 5.0%. SocGen describes the situation as a "downward spiral," while Barclays calls it "from bad to worse" and a "vicious cycle." Morgan Stanley also cautions that "things could get worse before they get better," according to a Reuters report.

Traders are expected to closely monitor the People's Bank of China's (PBoC) Monetary Policy Committee (MPC) monthly review of its key lending rates on Friday, following disappointing industrial output growth and retail sales figures for August. This review could provide further insight into China's economic trajectory and its potential impact on global markets.

New Zealand's Gross Domestic Product (GDP) for Q2 is set to be released on Thursday, with markets anticipating a 0.4% quarter-on-quarter contraction following a 0.2% expansion in Q1. The decline is likely driven by continued weakness in consumer spending, raising concerns about the overall health of the economy.

The US Dollar (USD) is under pressure as expectations grow that the Federal Open Market Committee (FOMC) may opt for a significant 50 basis point rate cut on Wednesday. According to the CME FedWatch Tool, markets are pricing in a 38.0% chance of a 25 basis point Federal Reserve interest rate cut at the September meeting, while the probability of a 50 basis point cut has surged to 62.0%, up from 50.0% just a day earlier. This shift reflects heightened anticipation of more aggressive monetary easing.

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.

Share: Feed news

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.

XM
Account
7.2
Tools
9.2
Service
9.4
Trading
9.0
Trust
7.0
Experience
8.4
Read review
Moneta Markets
Account
7.4
Tools
6.6
Service
8.0
Trading
6.6
Trust
5.2
Experience
9.2
Read review
Trading Pro
Account
7.2
Tools
5.2
Service
6.6
Trading
8.0
Trust
5.0
Experience
7.0
Read review
Pepperstone
Account
8.2
Tools
8.2
Service
7.4
Trading
9.0
Trust
8.8
Experience
9.0
Read review
XM
Read review
Moneta Markets
Read review
Trading Pro
Read review
Pepperstone
Read review
Trading Pro
Read review
Pepperstone
Read review
XM
Read review
Moneta Markets
Read review
Trading Pro
Account
7.2
Tools
5.2
Service
6.6
Trading
8.0
Trust
5.0
Experience
7.0
Read review
Pepperstone
Account
8.2
Tools
8.2
Service
7.4
Trading
9.0
Trust
8.8
Experience
9.0
Read review
XM
Account
7.2
Tools
9.2
Service
9.4
Trading
9.0
Trust
7.0
Experience
8.4
Read review
Moneta Markets
Account
7.4
Tools
6.6
Service
8.0
Trading
6.6
Trust
5.2
Experience
9.2
Read review

Recommended content


Recommended content

Editors’ Picks

Gold price jumps to fresh record high above $3,200 on US-China tariff war

Gold price jumps to fresh record high above $3,200 on US-China tariff war

Gold price sits at all-time highs of $3,219 in the Asian session on Friday. The weakening of the US Dollar and escalating trade war between the US and China provide some support to traditional safe haven asset Gold price amid increased dovish Fed expectations. 

Gold News
USD/JPY recovers losses in sync with US Dollar, retakes 143.50

USD/JPY recovers losses in sync with US Dollar, retakes 143.50

USD/JPY is trimming losses to retest 143.50 in Asian trading hours on Friday, having tested levels under 143.00. The pair is tracking the US Dollar price action amid persistent trade jitters and US recession fears. The Fed-BoJ divergent policy expectations support the Japanese Yen, keep the weight intact on the pair.  

USD/JPY News
AUD/USD consolidates weekly gains near 0.6250 despite trade tensions

AUD/USD consolidates weekly gains near 0.6250 despite trade tensions

AUD/USD consolidates weekly gains near 0.6250 in Asian trading on Friday. The pair capitalizes on sustained US Dollar weakness even as risk aversion remains at full steam on deepening US-China trade war. The White House confirmed on Thursdayt that the cumulative US tariffs on Chinese goods have risen to 145%.

AUD/USD News
Can Trump's tariff pause and declining inflation keep Bitcoin afloat? Experts weigh in

Can Trump's tariff pause and declining inflation keep Bitcoin afloat? Experts weigh in

Bitcoin dived below $80,000 on Thursday despite US Consumer Price Index data coming in lower than expected and President Donald Trump's 90-day reciprocal tariffs pause on 75 countries.

Read more
Trump’s tariff pause sparks rally – What comes next?

Trump’s tariff pause sparks rally – What comes next?

Markets staged a dramatic reversal Wednesday, led by a 12% surge in the Nasdaq and strong gains across major indices, following President Trump’s unexpected decision to pause tariff escalation for non-retaliating trade partners. 

Read more
The Best brokers to trade EUR/USD

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.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025