The NZD\/USD declined to around 0.5760 during early European hours on Thursday, continuing the trend from the previous session. This occurred despite New Zealand’s GDP rising by 1.1% in Q3, exceeding the expected 0.9% increase, implying that stronger growth may not elevate inflation.<\/p>\n
On an annual basis, New Zealand’s GDP grew by 1.3% in Q3, recovering from a previous decline. However, expectations of an imminent rate hike by the Reserve Bank of New Zealand have lessened, with markets now predicting a 40% probability of a rate increase by July next year, compared to 50% earlier.<\/p>\n
This backdrop coincides with stability in the US Dollar as market participants await the US Consumer Price Index report for insights into inflation trends. The CME FedWatch tool indicates a 75.6% chance of the US Federal Reserve maintaining current rates in their January meeting, which has increased slightly from the previous week.<\/p>\n
The New Zealand Dollar, often influenced by its economic health, central bank policy, and trade relations with China, might also be affected by changes in dairy prices. Economic data and broader market sentiment play a role in currency valuation, impacting decisions by the Reserve Bank of New Zealand.<\/p>\n
Given the current weakness in the NZD\/USD, which is trading near 0.5750, we should anticipate continued downward pressure. New Zealand\u2019s stronger-than-expected Q3 GDP growth is not translating into inflation fears, which means the Reserve Bank of New Zealand (RBNZ) is unlikely to raise interest rates soon. With the RBNZ on hold, the primary upward catalyst for the Kiwi is effectively off the table for the coming weeks.<\/p>\n
The market’s attention is now firmly on the US Consumer Price Index (CPI) data due later today. A higher-than-expected inflation reading, such as the forecasted 3.1%, would reinforce the Federal Reserve’s patient stance on rate cuts and strengthen the US Dollar. We have seen US inflation fall from its highs of over 9% back in 2022, but this final stretch is proving to be difficult, keeping the Fed cautious.<\/p>\n
For those trading derivatives, this setup suggests a bearish outlook for the NZD\/USD pair. We could consider buying put options to profit from a further decline, especially if the US CPI data comes in hot. This strategy provides downside exposure while capping the maximum potential loss to the premium paid.<\/p>\n
The policy divergence between a dovish RBNZ and a patient Fed is a key theme we should trade on. Shorting NZD\/USD futures contracts for the January 2026 expiry could be a viable strategy, targeting a move towards the year’s lows. Looking at the charts from earlier in 2025, a sustained break below the 0.5700 support level could open up further downside.<\/p>\n
We must also monitor external factors, as the Kiwi is sensitive to global risk sentiment and data from China. Recent industrial production figures from China have been underwhelming, signaling potential weakness for New Zealand’s export demand. Another poor result in the upcoming Global Dairy Trade auction would provide another reason to maintain a short position on the New Zealand Dollar.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" NZD\/USD falls despite strong GDP; rate hike expectations ease as markets await key US inflation data.<\/p>\n","protected":false},"author":62,"featured_media":17004,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37195","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37195","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=37195"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37195\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17004"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=37195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=37195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=37195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}