CFD Trading Rate New Zealand Dollar vs US Dollar (NZDUSD)

• NZD/USD loses ground amid risk aversion ahead of Fed interest rate decision on Wednesday.
• Traders expect the Fed to maintain its policy rate within the target range of 4.25%-4.50%.
• The RBNZ is widely expected to deliver another bumper 50 bps rate cut in February.

NZD/USD continues to lose ground for the third consecutive day, trading around 0.5660 during the European hours on Wednesday. The pair faces challenges amid risk-off sentiment ahead of the Federal Reserve’s (Fed) interest rate decision scheduled later in the North American session.

The US Dollar Index (DXY), which measures the US Dollar’s (USD) value against six major currencies, remains steady around 108.00 at the time of writing. The US Dollar receives support from the Federal Reserve’s (Fed) cautious stance regarding its policy outlook.

According to the CME FedWatch tool, market expectations indicate nearly 100% certainty that the Fed will maintain its policy rate within the target range of 4.25%-4.50%. However, traders will be closely monitoring Fed Chair Jerome Powell’s press conference for any hints regarding the future direction of monetary policy.

Additionally, the Greenback gained ground following tariff threats made by US President Donald Trump. Trump announced plans on Monday evening to impose tariffs on imports of computer chips, pharmaceuticals, steel, aluminum, and copper. The goal is to shift production to the United States (US) and bolster domestic manufacturing.

The New Zealand Dollar struggles due to dovish expectations surrounding the Reserve Bank of New Zealand’s (RBNZ) policy stance. Swaps markets are now pricing in nearly a 90% chance of another 50 bps reduction on February 19, adding to the two cuts already delivered earlier in the cycle. The central bank is expected to deliver a total of 100 bps of rate cuts for the remainder of 2025.

RBNZ Chief Economist Conway stated on Wednesday that the Official Cash Rate (OCR) is expected to move toward the neutral interest rate in the absence of future shocks. The long-term nominal neutral interest rate is currently estimated to be between 2.5% and 3.5%. The Monetary Policy Committee remains confident that persistent domestic inflationary pressures will subside. A decline in domestic pricing intentions and inflation expectations is expected to pave the way for further easing of the OCR, as indicated in November.

• NZD/USD softens to around 0.5665 in Wednesday’s early Asian session. 
• The Fed is expected to hold its benchmark rate steady on Wednesday. 
• RBNZ’s Conway said rate will tend towards neutral in the absence of future shocks to the system as pandemic-related disruptions fade.

The NZD/USD pair extends the decline to near 0.5665 during the early Asian session on Wednesday, pressured by the renewed US Dollar (USD) demand. The US Federal Reserve interest rate decision will take center stage later on Wednesday. 

Market pricing is pointing to a near 100% certainty that the Fed will keep the policy rate in a target range of 4.25%-4.50%, according to the CME FedWatch tool. However, investors will closely watch Fed Chair Jerome Powell’s press conference as it might offer additional insights into the monetary policy outlook. The cautious stance from the Fed officials could provide some support to the Greenback and act as a headwind for the pair. 

“Nobody knows what to expect from the White House. The policy moves are still very unclear, but we do know that a number of those proposals that have been talked about in the White House are a bit inflationary, and I think that’s going to keep the Fed in check,” said U.S. Bank chief economist Beth Ann Bovino.

Late Tuesday, RBNZ Chief Economist Paul Conway said that easing domestic pricing intentions and a drop in inflation expectations will help open the way for some further easing of the OCR, as signalled in November.

The dovish bets of the Reserve Bank of New Zealand (RBNZ) could undermine the New Zealand Dollar (NZD). Swaps markets are now pricing in nearly 90% possibility of another 50 basis points (bps) reduction on February 19, adding to the two delivered earlier in the cycle. The New Zealand central bank is anticipated to deliver a total of 100 bps of rate cuts for the remainder of 2025.

• NZD/USD closed lower on Tuesday at 0.5670, reflecting a bearish session.
• Technical indicators signal a weakening momentum, with the RSI declining and the MACD showing reduced bullish activity.

The NZD/USD pair continued its downward movement on Tuesday, closing at 0.5670 as selling pressure persisted for a second straight day. The session highlighted a bearish tone, with the pair opening lower and failing to recover any significant ground during the day. 

From a technical perspective, the Relative Strength Index (RSI) dipped to 51, still within positive territory but sharply declining, indicating weakening bullish momentum. Similarly, the Moving Average Convergence Divergence (MACD) histogram shows a reduction in green bars, reflecting a noticeable slowdown in buying activity. These indicators align with the bearish sentiment dominating the session.

Traders are closely monitoring support near 0.5630 where the 20-day Simple Moving Average stands, which, if breached, could pave the way for a test of the 0.5600 psychological level. On the upside, resistance lies at 0.5705, and a break above this could provide the foundation for a potential rebound. Until then, the pair remains vulnerable to further downside pressures.

NZD/USD daily chart

• NZD/USD receives downward pressure from risk-off mood amid fresh tariff threats from US President Donald Trump.
• Trump plans to impose tariffs on US imports of computer chips, pharmaceuticals, steel, aluminum, and copper.
• Traders expect the RBNZ to deliver a 50 basis point rate cut in February.

The NZD/USD pair continues its downward trend for the second day, trading around 0.5660 during early European hours on Tuesday. This decline is attributed to fresh tariff threats from US President Donald Trump.

On Monday evening, President Trump announced plans to impose tariffs on imports of computer chips, pharmaceuticals, steel, aluminum, and copper, aiming to shift production to the United States and boost domestic manufacturing. Additionally, Trump's advisers consider imposing 25% tariffs on Mexico and Canada by February 1.

Meanwhile, the US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, hovers near 108.00. Market participants are likely to monitor key US economic releases later in the day, including Durable Goods Orders, the Conference Board’s Consumer Confidence Index, and the Richmond Fed Manufacturing Index.

The Kiwi Dollar struggles due to dovish expectations surrounding the Reserve Bank of New Zealand’s (RBNZ) policy stance. Swaps markets are now pricing in nearly a 90% chance of another 50 bps reduction on February 19, adding to the two cuts already delivered earlier in the cycle. The central bank is expected to deliver a total of 100 bps of rate cuts for the remainder of 2025.

In a parliamentary speech on Tuesday, New Zealand Prime Minister Christopher Luxon emphasized his government's focus on growth to lift incomes, strengthen local businesses, and create opportunities in 2025. He noted promising signs of success in 2024, such as low inflation, falling interest rates, rising wages, and increased business and consumer confidence.

• NZD/USD weakens to near 0.5670 in Tuesday’s early Asian session, down 0.38% on the day. 
• Trump said that he will place tariffs on imports of computer chips, pharmaceuticals, steel, aluminum, and copper.
• The downbeat Chinese PMI data and RBNZ dovish bets continue to undermine the Kiwi. 

The NZD/USD pair attracts some sellers to around 0.5670 during the early Asian session on Tuesday. The US Dollar (USD) gains traction due to US President Donald Trump's tariff threats. Later on Tuesday, the US Durable Goods Orders, the Conference Board’s Consumer Confidence, and the Richmond Fed Manufacturing Index will be released. 

Late Monday, Trump said that he will impose tariffs on imports of computer chips, pharmaceuticals, steel, aluminum, and copper. The purpose is to bring production to the United States, boosting domestic manufacturing. Additionally, Scott Bessent, Trump’s Treasury secretary, said that he wanted to push new universal tariffs on US imports to start at 2.5%. The levies could be pushed up to as high as 20%, in line with Trump’s maximalist position on the campaign trail last year. The Greenback strengthens following this headline and creates a headwind for the pair. 

The US Federal Reserve (Fed) interest rate decision will take center stage on Wednesday. The US central bank will likely pause cutting rates after reducing them by a total of 100 basis points (bps) since July 2024. Traders will closely watch the press conference as it might offer some hints about the US interest rate path. 

“While inflation concerns have significantly abated, they still remain. As a result, it is quite possible that there will be fewer rate cuts over the course of next year than anticipated only a few months ago,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion.

The disappointed Chinese economic data and dovish expectation of the Reserve Bank of New Zealand (RBNZ) could weigh on the New Zealand Dollar (NZD). Swaps markets are now pricing in nearly 90% chance of another 50 bps reduction on February 19, adding to the two delivered earlier in the cycle. The New Zealand central bank is anticipated to deliver a total of 100 bps of rate cuts for the remainder of 2025.

• NZD/USD declines on Monday, falling back toward recent support at 0.5685.
• Mixed technical signals highlight uncertainty, with momentum indicators losing clarity.
• Traders eye key levels, with market sentiment appearing to shift cautiously bearish.

The NZD/USD pair faced renewed selling pressure on Monday, declining by 0.45% to settle near 0.5685. This movement underscores the pair’s ongoing volatility, as sharp swings and alternating price levels characterize its recent performance. Despite earlier signs of bullish momentum, the pair now appears to be losing steam, keeping traders cautious about the near-term outlook.

Technical indicators present a mixed picture. The Relative Strength Index (RSI) has slid to 54, remaining in positive territory but showing a sharp decline, signaling a waning bullish bias. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains flat with green bars, suggesting a lack of clear directional momentum. This divergence between indicators reflects growing uncertainty and raises the possibility of a shift in sentiment toward bearishness.

Key levels are likely to guide the pair’s trajectory in the short term. Immediate support is seen at 0.5670, with a break below this level potentially exposing 0.5630. On the upside, resistance remains at 0.5710, and a sustained move above this level would be required to reinvigorate the bullish case. The broader market sentiment and technical clarity will be critical in determining the pair’s next moves.

NZD/USD daily chart

• NZD/USD weakens as risk aversion intensifies, driven by growing support among Trump’s advisers for imposing tariffs on Mexico and Canada.
• Trump announced plans to impose tariffs on Colombia; however, further action was averted as Colombia later agreed to all terms.
• The NZD remains under pressure following the release of mixed PMI data from China, New Zealand’s close trading partner.

NZD/USD has given up its recent gains from the previous two sessions, trading around 0.5680 during European hours on Monday. The risk-sensitive Kiwi pair faces challenges amid increased risk aversion as the Wall Street Journal (WSJ) reported growing momentum among Trump's advisers to impose 25% tariffs on Mexico and Canada starting February 1. Trump's advisers are adamant about not waiting for negotiations or talks.

Moreover, Trump announced plans on Sunday to impose tariffs and sanctions on Colombia, following the country's refusal to allow US military planes carrying deported migrants. However, the White House announced on Monday that Colombia has agreed to all terms, easing some of the tensions. Colombia's Foreign Minister confirmed that the "impasse with the US has been overcome."

The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, has rebounded from its monthly low of 107.22 recorded on Friday. The DXY trades near 107.70 at the time of writing.

The NZD/USD pair remains under pressure following the release of mixed Chinese Purchasing Managers' Index (PMI) data. As close trade partners, China's economic performance significantly impacts New Zealand’s economy.

China's NBS Manufacturing PMI dropped to 49.1 in January, down from 50.1 in December, missing market expectations of 50.1. Similarly, the NBS Non-Manufacturing PMI fell to 50.2 in January from December's 52.2 reading.

The New Zealand Dollar (NZD) failed to gain support from China’s new stimulus measures aimed at promoting the development of index investment products, as part of efforts to revive the struggling equity market. The China Securities Regulatory Commission (CSRC) has approved a second round of long-term stock investment pilot programs valued at 52 billion Yuan ($7.25 billion).

• NZD/USD softens to around 0.5690 in Monday’s Asian session. 
• The uncertainty surrounding Trump’s tariff policies weighs on the New Zealand Dollar. 
• The dovish expectation of the RBNZ might drag the NZD lower against the USD. 

The NZD/USD pair remains under selling pressure near 0.5690 during the Asian trading hours on Monday. The New Zealand Dollar (NZD) weakens amid the cautious mood and uncertainty over US President Donald Trump’s tariff measures. Traders await the US Federal Reserve (Fed) interest rate decision scheduled for Wednesday. 

The Greenback has edged higher after Trump announced on Sunday to impose a 25% tariff on all Colombian goods coming into the US, which will be raised to 50% in a week. Investors will closely monitor the development surrounding Trump’s tariff policies on China, as China is a major trading partner to New Zealand. Last week, Trump signaled that the nation could reach a deal with China without using tariffs.

The Fed is expected to keep interest rates on hold at its January meeting on Wednesday, but market players will keep an eye on the US rate path this year, especially after Trump demanded the Fed continue lowering borrowing costs. With so much uncertainty, "we expect (the Fed) to retain maximal optionality" to resume cuts in March or continue a pause, said Bank of America analyst Mark Cabana

On the other hand, the softer New Zealand's Consumer Price Index (CPI) inflation data for the fourth quarter of 2024 raised the bets that the Reserve Bank of New Zealand (RBNZ) will deliver further rate cuts, which might weigh on the Kiwi. Swaps markets are now pricing in nearly 90% odds of another 50 basis points (bps) reduction on February 19, adding to the two delivered earlier in the cycle. The New Zealand central bank is anticipated to deliver a total of 100 bps of rate cuts for the remainder of 2025.

• NZD/USD advances on Friday, holding above the key 0.5700 level.
• The pair maintains its uptrend, supported by bullish technical indicators.
• Focus remains on whether momentum can push the pair toward the next resistance level at 0.5750.

The NZD/USD pair continued its upward trajectory on Friday, rising by 0.44% to settle at 0.5705 and mantains its footing above its 20-day Simple Moving Average (SMA). This marks a steady continuation of the bullish momentum observed since mid-January, which was initiated by a breakout above the 0.5600 level. While minor pullbacks earlier in the week reflected potential profit-taking, the pair has maintained its position above 0.5700, signaling strong buying interest. On the negative side, the pair failed to sustain its intraday push near 0.5800.

Technical indicators align with the pair’s positive outlook. The Relative Strength Index (RSI) has climbed sharply to 63, firmly in positive territory, suggesting healthy upward momentum and room for further gains. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram shows flat green bars, indicating sustained buying pressure despite a temporary pause in acceleration.

Immediate resistance is now seen at 0.5750, a level that could act as a gateway for the pair to aim higher. On the downside, support is found at 0.5670, followed by a more robust floor around 0.5640. As long as the pair stays above these support levels, the bullish trajectory remains intact, with potential for further appreciation in the near term.

NZD/USD daily chart

• NZD/USD jumps strongly to near 0.5700 as US President Trump signaled that he could reach a deal with China.
• Trump’s assumption of making a deal with China without imposing tariffs has diminished the risk-premium of the US Dollar.
• The Fed is unlikely to be impacted by Trump’s call for immediate rate cuts.

The NZD/USD pair soars slightly above the key level of 0.5700 in Friday’s European session. The Kiwi pair strengthens amid an improvement in appeal of antipodeans after comments from United States (US) President Donald Trump in an interview with Fox News on Thursday signaled that the nation could reach to a deal with China without using tariffs.

Donald Trump said that he discussed an array of issues with China, including TikTok, trade, and Taiwan before returning to the White House. He added, "It was a good, friendly conversation,” and a trade deal can be achieved “without exercising tariffs”.

During the inauguration ceremony, Trump threatened to impose 10% tariffs on China and 25% on Mexico and Canada.

Trump’s soft tone with China has improved the New Zealand Dollar’s (NZD) appeal, given that New Zealand (NZ) is one of the leading trading partners of China.

Meanwhile, Trump’s friendly talk with China has diminished risk premium of the US Dollar (USD), which had a strong run in last few months. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, tumbles to near 107.55, the lowest level in almost a month.

The Greenback has also faced selling pressure from Trump’s speech at the World Economic Forum (WEF) in Davos, in which he endorsed the need for immediate interest rate cuts. With oil prices going down, I'll demand that interest rates drop immediately, and likewise, they should be dropping all over the world," Trump said.

Trump’s comments are unlikely to impact the Federal Reserve’s (Fed) monetary policy stance, as the Fed is an independent body.

• NZD/USD softens to near 0.5675 in Friday's early Asian session. 
• The RBNZ is expected to cut its Official Cash Rate by 50 bps in the February meeting.
• Trump said he would demand that interest rates drop immediately.

The NZD/USD pair trades in negative territory around 0.5675 during the early Asian session on Friday. The New Zealand Dollar (NZD) struggles to gain ground amid the uncertainty surrounding tariff announcements on China by US President Donald Trump and the dovish stance of the Reserve Bank of New Zealand (RBNZ).

New Zealand's Consumer Price Index (CPI) inflation data for the fourth quarter of 2024 revealed that underlying inflation continues to soften, raising the bets that the RBNZ will deliver further rate cuts. Swaps markets are now pricing in nearly 90% possibility of another 50 basis points (bps) reduction on February 19, adding to the two delivered earlier in the cycle. The RBNZ is expected to deliver a total of 100 bps of rate cuts for the remainder of 2025.

On the other hand, the downside for the pair might be limited after Trump’s remarks. Late Thursday, Trump said he wants the US Federal Reserve (Fed) to cut interest rates immediately. "With oil prices going down, I'll demand that interest rates drop immediately, and likewise they should be dropping all over the world," said Trump at the World Economic Forum in Davos, Switzerland.

Investors will closely monitor further clarity on Trump’s tariff policies as well as the US economic data. The flash US S&P Global Manufacturing and Services Purchasing Managers Index (PMI) for January will take center stage later on Friday. Additionally, the US Existing Home Sales and Michigan Consumer Sentiment Index data will be published. 

• NZD/USD tallies another winning day on Thursday.
• The RSI climbs signaling strengthening bullish sentiment.
• Pair seems to be building support around the 20-day SMA.

The NZD/USD pair settled at 0.5670, and the price action suggest a period of consolidation near recent highs but bullish momentum remains intact

Technical indicators reinforce the constructive outlook. The Relative Strength Index (RSI) has surged to 52, remaining in positive territory and reflecting increased buying interest. Additionally, the Moving Average Convergence Divergence (MACD) histogram continues to display rising green bars, underscoring sustained upward momentum and hinting at potential further gains in the near term.

From a technical perspective, immediate resistance lies at 0.5685, with a break above this level likely paving the way for a test of 0.5710. On the downside, support is observed at 0.5645, and any sustained drop below this level could trigger a deeper pullback toward 0.5610. Traders will be closely monitoring these levels as the pair seeks to establish a clearer directional bias.

NZD/USD daily chart

Further range trading is likely, probably between 0.5640 and 0.5685. In the longer run, New Zealand Dollar (NZD) is likely to continue to rise, potentially reaching the major resistance at 0.5750, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD is likely to continue to rise

24-HOUR VIEW: "When NZD was trading at 0.5675 yesterday, we indicated that 'the current price movements are likely part of a range trading phase, probably between 0.5620 and 0.5690.' However, NZD traded in a narrower range of 0.5650/0.5687. Momentum indicators are turning flat, and further range trading is likely, probably between 0.5640 and 0.5685."

1-3 WEEKS VIEW: "Our update from two days ago (21 Jan, spot at 0.5680) remains valid. As highlighted, NZD 'is likely to continue to rise, potentially reaching the major resistance at 0.5750.' Although NZD has not advanced much further, only a break below 0.5620 (‘strong support’ level previously at 0.5600) will invalidate our view."

• NZD/USD extends its losing streak due to the hawkish tone surrounding the Fed’s policy stance.
• US weekly Initial Jobless Claims could show an increase of 220K for the previous week, up from the prior 217K.
• The New Zealand Dollar failed to gain momentum despite the fresh stimulus measures from New Zealand and China.

NZD/USD continues to remain subdued for the third consecutive session, trading around 0.5660 during the European hours on Thursday. The pair’s downside is attributed to the stronger US Dollar (USD) amid hawkish sentiment surrounding the US Federal Reserve’s (Fed) policy stance.

According to the CME FedWatch tool, traders are confident that the Fed will keep its key borrowing rates in the range of 4.25%-4.50% in the upcoming three policy meetings. Moreover, US President Donald Trump’s policies could drive inflationary pressures, potentially limiting the Fed to just one more rate cut in 2025.

President Trump stated that his administration is considering imposing a 10% tariff on Chinese imports starting February 1. However, the proposed tariff is significantly lower than the previously threatened 60% rate, it aligns with the pledge Trump made during his presidential campaign.

Traders will likely monitor Friday's release of the preliminary US S&P Global Purchasing Managers Index (PMI) and the Michigan Consumer Sentiment Index for January. These indicators are likely to provide valuable insights into near-term economic trends.

The New Zealand Dollar (NZD) struggled to gain momentum on Thursday, despite the introduction of fresh stimulus measures from New Zealand and its key trading partner, China. New Zealand’s Prime Minister Christopher Luxon announced plans to ease foreign investment regulations, aiming to attract and support overseas investors. However, the NZD remained under pressure, reflecting broader market concerns and cautious sentiment.

Chinese authorities introduced several measures to stabilize its stock markets, including allowing pension funds to increase investments in domestic equities. A pilot scheme enabling insurers to purchase equities will be launched in the first half of 2025, with an initial scale of at least 100 billion Yuan.

• NZD/USD recovers to around 0.5670 in Thursday’s Asian session.
• Trump tariff threats could weaken the Kiwi in the near term.
• Chinese officials announced fresh measures to boost long-term funds for equity markets.

The NZD/USD pair trades in positive territory around 0.5670 during the early Asian session on Thursday. The New Zealand Dollar (NZD) edges higher following the announcement about fresh stimulus measures from China and New Zealand. Traders will keep an eye on the US weekly initial Jobless Claims data, which is due later on Thursday. 

Trump said that the administration was considering imposing a 10% tariff on Chinese-made goods arriving in the US from as early as 1 February. This action came a day after Trump stated that he was thinking about introducing 25% tariffs on imports from Mexico and Canada on February 1. The concerns about the renewed trade war between the US and China, along with the Trump tariff threats, could exert some selling pressure on the China-proxy Kiwi, as China is a major trading partner to New Zealand. 

On the other hand, fresh stimulus measures from New Zealand and China might help limit the NZD’s losses. Early Thursday, Prime Minister Christopher Luxon announced that the country will loosen foreign investment regulations to attract and support foreign investors into New Zealand. 

Additionally, Chinese officials on Thursday introduced several measures to stabilize its stock markets, including allowing pension funds to increase investments in domestic equities. Chinese authorities said there will be hundreds of billions of Yuan in new long-term capital for A-shares every year from state-owned insurance companies. Large state-owned commercial insurance companies still have room to increase their capital market investment.

• NZD/USD edges slightly lower to 0.5670 on Wednesday, maintaining its position within a narrow trading band.
• RSI dips, showing a mild loss of momentum while staying in positive territory.

The NZD/USD pair continued its range-bound behavior on Wednesday, slipping marginally to 0.5670 after testing the upper boundary of its recent 0.5540–0.5690 consolidation zone. While the pair has experienced pockets of volatility, it has yet to establish a definitive directional bias, leaving traders cautious about committing to either side.

Technical indicators reflect the pair’s current state of indecision. The Relative Strength Index (RSI) has softened slightly to 51, staying within positive territory but pointing to waning bullish enthusiasm. Conversely, the Moving Average Convergence Divergence (MACD) histogram remains supportive, with rising green bars signaling a potential shift toward upward momentum if buyers can sustain their efforts.

To escape its current range, the pair would need to break decisively above the 0.5690 resistance, potentially opening the door for a move toward the 0.5730 level. On the flip side, a retreat below 0.5540 could pave the way for further downside, with 0.5500 emerging as a key support level to watch.

NZD/USD daily chart

Current price movements are likely part of a range trading phase likely between 0.5620 and 0.5690. In the longer run, NZD is likely to continue to rise, potentially reaching the major resistance at 0.5750, ING’s FX analyst Francesco Pesole notes.

NZD is likely to continue to rise

24-HOUR VIEW: “Yesterday, we held the view that NZD ‘could break above 0.5700, but it might not be able to maintain a foothold above this level.’ However, NZD did not break above 0.5700, trading between 0.5622 and 0.5688. The current price movements are likely part of a range trading phase, probably between 0.5620 and 0.5690.”

1-3 WEEKS VIEW: “Our update from yesterday (21 Jan, spot at 0.5680) remains valid. As highlighted, NZD ‘is likely to continue to rise, potentially reaching the major resistance at 0.5750.’ On the downside, should NZD break below 0.5600 (no change in ‘strong support’ level) it would mean that the current upward pressure has eased.”

• NZD/USD depreciates as annual inflation remains within the RBNZ target range of 1-3% in December.
• US President Donald Trump's administration is considering imposing a 10% tariff on Chinese imports.
• The US Dollar maintains its position as Trump confirmed that the proposal for universal tariff hikes is still under consideration.

NZD/USD extends its losses for the second consecutive day, trading around 0.5650 during the early European hours on Wednesday. The New Zealand Dollar (NZD) received downward pressure following the latest domestic inflation figures.

New Zealand's Consumer Price Index (CPI) remained steady at 2.2% year-over-year in Q4 2024, marginally exceeding expectations but staying within the Reserve Bank of New Zealand's (RBNZ) target range of 1-3%. Quarterly, the CPI increased by 0.5%, showing a slight moderation from the 0.6% rise recorded in the previous quarter.

The data suggested that price pressures remained largely contained, reinforcing expectations for another jumbo rate cut from the Reserve Bank of New Zealand (RBNZ) in February. Swaps markets are now pricing in a 90% chance of another 50 basis points (bps) reduction on February 19, adding to the two delivered earlier in the cycle. The RBNZ is expected to deliver a total of 100 bps of rate cuts for the remainder of 2025.

Additionally, the NZD/USD pair remains subdued due to increased risk-off sentiment as US President Donald Trump announced that his administration is considering imposing a 10% tariff on Chinese imports starting February 1.

The US Dollar (USD) holds onto modest gains as US President Donald Trump confirmed that the proposal for universal tariff hikes is still under consideration, although he stated, "We are not ready for that yet." Additionally, Trump issued a memorandum directing federal agencies to investigate and address the ongoing trade deficits.

Moreover, the USD could recover its recent losses in the near term as the US Federal Reserve (Fed) is expected to maintain its benchmark overnight rate in the 4.25%-4.50% range during its January meeting. Investors anticipate that Trump's policies could increase inflationary pressures, which might limit the Fed to only one more rate cut.

• NZD/USD softens to around 0.5660 in Wednesday’s early Asian session, down 0.18% on the day. 
• Trump’s tariff threats undermine the China-proxy Kiwi. 
• The RBNZ will likely deliver a third jumbo rate cut at its February meeting. 

The NZD/USD pair attracts some sellers to near 0.5660 during the early Asian session on Wednesday. The New Zealand Dollar (NZD) faces some selling pressure after US President Donald Trump said that he is discussing a 10% tariff on China on February 1. 

Trump stated on Tuesday that his administration is discussing imposing a 10% tariff on goods imported from China on February 1 because fentanyl is being sent from China to Mexico and Canada, per Reuters. Investors will closely watch the developments surrounding US tariff policies, as China is a major trading partner to New Zealand. 

New Zealand Consumer Price Index (CPI) inflation was slightly hotter than expected in December. Nonetheless, the overshoot doesn’t appear significant enough to dampen expectations for another jumbo rate cut from the Reserve Bank of New Zealand (RBNZ) in February.

Swaps markets are now pricing in a 90% chance of another 50 basis points (bps) reduction on February 19, adding to the two delivered earlier in the cycle. The RBNZ is expected to deliver a total of 100 bps of rate cuts for the remainder of 2025. The dovish stance of the RBNZ continues to weigh on the Kiwi against the US Dollar (USD).