The NZD/USD currency pair showed little movement following the release of China’s trade balance figures for November. As of Tuesday morning in Asia, the New Zealand Dollar was trading at approximately 0.5830, reflecting a retracement from its recent gains. This response follows China’s announcement of an expanded trade balance, indicating cautious sentiment among traders as they await the forthcoming US Consumer Price Index (CPI) data release scheduled for Wednesday.
China’s trade balance reached CNY 692.8 billion in November, a slight increase from CNY 679.1 billion in the prior month. Although exports grew by 1.5% year-over-year in November, this marked a significant slowdown compared to October’s 11.2% increase. At the same time, imports rose by 1.2% year-over-year, recovering from a previous decline of 3.7%. The improvement in trade figures, coupled with China’s commitment to pursuing an aggressive fiscal policy and a moderate loosening of monetary policy for the upcoming year, offered some positive news for Kiwi dollar traders.
The NZD faces additional pressure as New Zealand’s Prime Minister emphasizes the need to rein in inflation and reduce interest rates, aiming to stimulate economic growth. This stance opens the door for potentially significant rate cuts in the early part of next year, which would keep the currency on its back foot.
Moreover, the US Dollar is on a winning streak, having strengthened for three consecutive days in anticipation of the CPI data. Current market expectations suggest a 85.8% probability that the Federal Reserve will implement a 25 basis point rate cut during its December meeting, based on insights from market analysis tools. In parallel, a recent consumer survey from the Federal Reserve Bank of New York revealed that U.S. consumers are grappling with uncertain economic prospects, although they noted improvements in their financial expectations and changing views on credit affordability.
