The New Zealand dollar regained some ground against the US dollar, climbing to around 0.5775 during Monday’s Asian trading session, marking a 0.3% intraday increase. The move came as investors reacted to mixed Chinese economic data and remained cautious ahead of a pivotal Federal Reserve decision later this week.
China’s November industrial production rose by 5.4% year-on-year, marginally outpacing expectations, while retail sales growth slowed to 3.0%, below the forecast of 4.6%. Despite the uneven economic performance, Beijing’s promise of greater fiscal support in 2024 lent moderate optimism to the China-proxy Kiwi. New Zealand’s economic reliance on its largest trading partner positions the NZD to benefit from any recovery in Chinese demand.
On the other side, hawkish signals from the Federal Reserve have limited gains for the NZD/USD pair, as investors anticipate the Fed may adopt a cautious approach to cutting rates. While a 25-basis-point rate cut on Wednesday is widely expected, Fed Chair Jerome Powell’s rhetoric on the outlook for the US economy will be key. Higher-for-longer US yields have kept the dollar supported, offering strong resistance to risk-sensitive currencies like the New Zealand dollar.
With both global growth uncertainty and Fed projections in focus, the NZD/USD pair may find itself vulnerable to further headwinds. A sustained break below the 0.5750 level could signal additional downside risks, while a dovish surprise from the Fed or more robust Chinese economic policy moves might bolster the Kiwi in the short term. For now, traders remain cautious, awaiting clearer directional cues from this week’s US and Chinese economic developments.
