The NZD/USD currency pair made significant strides in the Asian session on Tuesday, gaining approximately 0.60% to approach the 0.5600 level. This upward move follows a stronger-than-anticipated employment report from the United States, which could bolster the U.S. dollar and limit potential declines for the pair. Additionally, new data revealed a noteworthy acceleration in Chinese exports for December, surpassing previous estimates.
The NZD/USD rebound comes after hitting a two-year low, benefiting from a modest pullback in the US Dollar and positive economic indicators from China. Market participants are now closely monitoring the upcoming US Producer Price Index (PPI) for December, which is expected to influence market sentiment later in the day.
The US Dollar Index, which reflects the dollar’s performance against a selection of major currencies, is currently positioned around 109.60. This represents a decline from a peak of 110.17, marking the index’s highest point since November 2022. Furthermore, the yield on the 10-year US Treasury bond has surged to 4.8%, reaching levels not seen since late 2023.
The robust US Nonfarm Payrolls report released on Friday caused traders to significantly lower their projections for interest rate cuts by the Federal Reserve this year. Current market indicators suggest only one quarter-point rate reduction may occur in 2025, and some financial analysts believe the cycle of easing has concluded.
On the other hand, the data showcasing China’s exports indicated a growth of 10.7% year-on-year in December. The country’s trade surplus also expanded, rising to $104.84 billion from the previous month’s $97.44 billion. This recovery in China’s economy is likely to provide support for the New Zealand Dollar, given China’s pivotal role as a trading partner.
However, the anticipated return of U.S. President Donald Trump to the White House on January 20 has raised concerns about the potential of renewed trade tensions between the US and China, which could subsequently impact the New Zealand Dollar.
