NZD/USD fell to lows near 0.5760, marking the sixth straight day of decline amidst a moderately stronger US Dollar. The pair has extended its decline from last week’s highs above 0.5850, touching daily lows at 0.5763.
The US Dollar strengthened after the release of the Federal Open Market Committee’s minutes, which showed differing opinions among members regarding future monetary easing. A majority favoured a quarter-point interest rate cut in December, but three officials wanted to maintain steady rates, marking the highest dissent since 2019.
Impact Of Chinese Business Activity
Chinese business activity data did not alleviate bearish pressure on the New Zealand Dollar, despite China being New Zealand’s main trading partner. China’s manufacturing PMI rose 0.9 points to 50.1, and the non-manufacturing PMI increased 0.7 points to 50.2, indicating mild expansion.
The New Zealand Dollar’s value depends heavily on New Zealand’s economic health and central bank policy. Performance in the Chinese economy and dairy prices significantly influence the NZD due to trade relations. Economic data releases impact the NZD’s valuation, with strong growth favouring increases, while weak data leads to depreciation.
NZD strengthens during low-risk market periods as it is viewed as a commodity currency, but weakens in turbulent times as investors seek safe havens.
Further Decline In NZD USD
With the NZD/USD pair breaking down to 0.5760, we see the US Dollar as the primary driver for the coming weeks. The Federal Reserve’s minutes from the December 10 meeting revealed significant division, which is fueling uncertainty about future rate cuts. This uncertainty is a positive for the US Dollar, and we expect this trend to continue.
We should pay close attention to the reasons behind the Fed’s split decision, which was the most divided since 2019. The latest US inflation report for November 2025 showed core CPI remaining stubborn at 3.2%, well above the Fed’s target. This data supports the dissenting members who argued against the recent rate cut and suggests the bar for further easing is high.
On the New Zealand side, the Kiwi is showing unusual weakness by failing to react to positive news from its main trading partner. The recent Chinese PMI figures for December, which showed a return to expansion, should have provided support but were completely ignored. We also note that prices at the most recent Global Dairy Trade auction fell by 1.2%, adding another layer of pressure on the New Zealand economy.
For derivative traders, this environment suggests positioning for further NZD/USD weakness. Buying put options with strike prices below 0.5700 could be a viable strategy to capitalize on the ongoing downward momentum. The dollar’s strength is overpowering local factors, and we should ride this trend until we see a clear shift in Fed communication.
Looking ahead, the upcoming US jobs report for December will be the next major catalyst. The market will be watching to see if the “deteriorating labor market” mentioned in the Fed minutes gets worse, as the last report showed a modest payroll gain of only 155,000. However, unless we see a dramatic spike in unemployment, the sticky inflation numbers will likely keep the Fed cautious and the dollar well-supported.
It is also important to remember that the Reserve Bank of New Zealand is facing its own challenge with domestic inflation, which in the third quarter of 2025 was still high at 4.5%. While this might suggest the RBNZ will remain hawkish, the market is currently fixated on the Fed’s policy path. For now, the story is about US Dollar strength, making short NZD/USD positions the more logical play.
