NZD/USD rises above 0.5900 as US Dollar struggles ahead of US Retail Sales data
- NZD/USD strengthens after the release of key economic data from China.
- China's Q1 GDP expanded at an annual rate of 5.4%, exceeding market forecasts of 5.1%.
- The US Dollar struggles as escalating US-China trade tensions erode investor confidence in American assets.
NZD/USD continues its winning streak for the sixth successive day, trading around 0.5910 during the European hours on Wednesday. The pair appreciates as the New Zealand Dollar (NZD) gains ground following the release of key economic data from China.
China’s Gross Domestic Product (GDP) grew at an annual rate of 5.4% in the first quarter of 2025, matching the pace seen in Q4 2024 and surpassing market expectations of 5.1%. On a quarterly basis, GDP rose by 1.2% in Q1, following a 1.6% increase in the previous quarter, falling short of the forecasted 1.4% gain.
Meanwhile, China’s Retail Sales surged 5.9% year-over-year, beating expectations of 4.2% and up from February’s 4%. Industrial Production also outperformed, rising 7.7% compared to the 5.6% forecast and February’s 5.9% print.
The NZD/USD pair appreciates as the US Dollar (USD) faces headwinds due to eroding investor confidence in US assets amid escalating US-China trade tensions. The Wall Street Journal, citing informed sources, suggested that the Trump administration aims to leverage tariff negotiations to encourage US trading partners to reduce their engagements with China.
Late Tuesday, Bloomberg reported that US President Donald Trump initiated an investigation into potential tariffs on critical minerals, marking another move in the intensifying trade war that continues to affect key global economic sectors.
US Retail Sales data for March is set to be released later in the day, offering potential insights into how tariff-related uncertainties are impacting consumer spending. Additionally, Fed Chairman Jerome Powell is scheduled to deliver a speech during the late American session. Investors will likely turn their attention to the first-quarter CPI data, set for release on Thursday, as they seek insights into the Reserve Bank of New Zealand's (RBNZ) monetary policy trajectory.
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.
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