NZD/USD trades with mild losses to near 0.5950 on modest US Dollar strength

NZD/USD posts modest losses around 0.5960 in Friday’s early Asian session.
China’s exports beat expectations, rising over 8.0% in July.
Fed’s Waller emerges as the favorite for Fed Chair among the Trump team.

Lallalit Srijandorn FXStreet

The NZD/USD pair trades with mild losses near 0.5960 during the early Asian trading hours on Friday. However, the potential downside for the pair might be limited amid encouraging Chinese trade data. Traders will focus on the Federal Reserve’s Alberto Musalem speech later on Friday.

Strong import and export data from China suggested the economic recovery of New Zealand’s main trading partner, which could provide some support to the Kiwi. Data released on Thursday showed that China’s surplus widened in July as exports surged. Exports rose 8.0% YoY in July, compared to 7.2% in June. The country’s Imports increased 4.8% YoY in the same period versus 2.3% prior.

New Zealand’s inflation expectations fell slightly in the third quarter (Q3), according to the Reserve Bank of New Zealand (RBNZ) monetary conditions survey on Thursday. The country’s two-year inflation expectation eased to 2.28% in Q3 2025 from 2.29% seen in Q2, while one-year inflation expectations declined to 2.37% in Q3 versus 2.41 % in Q2. Most respondents expect the RBNZ to cut the cash rate at the next meeting. This, in turn, might cap the upside for the pair.

On the USD’s front, investors will closely monitor US President Donald Trump’s plans to replace Fed Chair Powell. Bloomberg reported late Thursday that Fed Governor Christopher Waller is emerging as a top candidate to serve as the central bank’s chair among Trump’s advisers.

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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