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

Robust momentum indicates New Zealand Dollar (NZD) could break above 0.5700, but it might not be able to maintain a foothold above this level. In the longer run, NZD is likely to continue to rise, potentially reaching the major resistance at 0.5750, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD is likely to continue to rise

24-HOUR VIEW: “The sharp surge in NZD that sent it to a high of 0.5682 was surprising (we were expecting sideways trading). While the advance is overbought, robust momentum indicates NZD could break above 0.5700. Given the overbought conditions, it might not be able to maintain a foothold above this level. The next major resistance at 0.5750 is also unlikely to come into view for now. Support is at 0.5620; a breach of 0.5630 would indicate that the current strong upward pressure has eased.”

1-3 WEEKS VIEW: “We indicated yesterday (20 Jan, spot at 0.5585) that the recent ‘upward momentum has largely faded, and from here, we expect NZD to trade in a 0.5540/0.5650 range.’ We did not anticipate the resurgence in momentum, as NZD soared above 0.5650, reaching a high of 0.5682. NZD is likely to continue to rise, potentially reaching the major resistance at 0.5750. We will maintain our positive NZD view as long as 0.5600 is not breached.”

• NZD/USD weakened as President Trump announced plans to direct federal agencies to review tariff policies.
• Traders speculate that Trump’s policies could drive inflationary pressures, potentially limiting the Fed to just one additional rate cut.
• Business NZ PSI fell to 47.9 in December from 49.5 in November, extending its contraction streak to ten consecutive months.

NZD/USD retraces its recent gains from the previous session, trading near 0.5650 during early European hours on Tuesday. The pair experienced volatility as US President Donald Trump's inauguration day created ripples in the markets.

The US Dollar (USD) appreciated following reports that Trump plans to direct federal agencies to review tariff policies and reassess the United States' trade relationships with Canada, Mexico, and China.

However, the NZD/USD gained some footing as the Greenback came under pressure. This was driven by Trump's apparent efforts to strengthen ties with Chinese President Xi Jinping, the TikTok deal, and hints of a potentially softer stance on tariffs.

US President Donald Trump stated, "If we make a TikTok deal and China doesn’t approve it, we could maybe put tariffs on China." This comment came after he signed an executive order delaying the enforcement of the TikTok ban by 75 days. Given the close trade relationship between China and New Zealand, any changes in China's economy could influence New Zealand's markets.

Meanwhile, the New Zealand Dollar (NZD) faced downward pressure as Business NZ's data reported a decline in the country’s Performance of Services Index (PSI). The PSI dropped to 47.9 in December from 49.5 in November, marking ten consecutive months of contraction.

Traders will closely monitor Wednesday’s Consumer Price Index (CPI) data, as the annual inflation rate is anticipated to drop to its lowest level since 2021. Markets are currently pricing in an 80% probability that the Reserve Bank of New Zealand (RBNZ) will cut its cash rate from 4.25% to 3.75% next month.

• NZD/USD remains under selling pressure around 0.5645, down 0.53% on the day. 
• Trump said he is thinking in terms of 25% tariffs on Mexico and Canada next week. 
• New Zealand’s PSI declined to 47.9 in December vs. 49.5 prior. 

The NZD/USD pair slumps to around 0.5645 during the Asian trading hours on Tuesday. The US Dollar (USD) rebounds after US President Donald Trump said that he intends to impose 25% tariffs on Canada and Mexico on February 1. 

Trump stated on Monday that tariffs could be levied against Mexico and Canada as soon as early February, per CNBC. “We’re thinking in terms of 25% (levies) on Mexico and Canada because they’re allowing cast number of people” over the border, Trump said. The Greenback recovers some lost ground following this report.

Meanwhile, the US dollar Index (DXY), a measure of the USD's value relative to its most significant trading partners' currencies, bounced off the two-week low and edges higher above 108.50, gaining 0.40% on the day.

Investors will closely monitor the development surrounding tariff policies, as Trump had also threatened China with tariffs of up to 60% in December. If he imposes any tariffs on China, this could weigh on the Kiwi, as China is a major trading partner to New Zealand. 

Data released by Business NZ on Tuesday showed that New Zealand’s Performance of Services Index (PSI) eased to 47.9 in December from 49.5 in November. This figure has now been in contraction for ten consecutive months. The downbeat report contributes to the New Zealand Dollar’s (NZD) downside. 
 

• NZD/USD jumps 1.65% on Monday, reaching 0.5675 on fresh buying interest.
• RSI climbs to positive terrain, reflecting steady bullish momentum and room for further gains.
• MACD histogram shows rising green bars, indicating an accelerating upward trajectory.

NZD/USD rallied on Monday, notching a 1.65% advance to settle around the 0.5675 mark. This robust performance comes amid a notable shift in sentiment, with traders appearing more inclined to favor the Kiwi dollar after its recent stretch of subdued price action. The mood has turned convincingly bullish, supported by technical studies pointing to ongoing upside potential.

According to the Relative Strength Index (RSI), which has pushed up to 52 and crossed the 50 middle point, the pair still has room to extend its climb despite trending on the higher side of the scale. In the meantime, the Moving Average Convergence Divergence (MACD) histogram continues to print progressively taller green bars, confirming that buying pressure remains intact. Together, these indicators hint at a market biased toward additional gains in the near term.

On the immediate horizon, any pullback may initially target the 0.5650 region, with stronger support near 0.5620 if the pair faces stronger selling. To the upside, a break beyond 0.5700 could open the door toward 0.5730, further reinforcing the pair’s shift in favor of the bulls.

NZD/USD daily chart

New Zealand Dollar (NZD) is likely to trade sideways between 0.5560 and 0.5610. In the longer run, upward momentum has largely faded; NZD is expected to trade in a 0.5540/0.5650 range, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD to trade in a 0.5540/0.5650 range

24-HOUR VIEW: "Our view for NZD to 'trade in a sideways range between 0.5580 and 0.5630' last Friday was incorrect, as it dropped to a low of 0.5564 before closing at 0.5585 (-0.41%). The decline did not result in a significant increase in momentum, and instead of continuing to decline, NZD is more likely to trade sideways between 0.5560 and 0.5610."

1-3 WEEKS VIEW: "While we noted 'a slight increase in momentum' last Thursday (15 Jan, spot at 0.5620), we pointed out that it 'must break and remain above 0.5650 before a move to 0.5695 is likely.' We added, 'the likelihood of NZD breaking clearly above 0.5650 will remain intact, provided that it remains above 0.5580 (‘strong support’ level).' Last Friday, NZD fell below 0.5580 (low has been 0.5564). Upward momentum has largely faded, and from here, we expect NZD to trade in a 0.5540/0.5650 range."

• NZD/USD remains stronger despite a cautious mood ahead of President-elect Donald Trump’s inauguration on Monday.
• Traders adopt caution amid uncertainty surrounding Trump’s policy pledges, including imposing tariffs and extending tax cuts.
• The PBoC maintained its one- and five-year Loan Prime Rates at 3.10% and 3.60%, respectively.

The NZD/USD pair pauses its two-day losing streak, trading around 0.5610 during the Asian hours on Monday. This upside of the pair is attributed to the subdued US Dollar (USD) amid cautious market sentiment ahead of President-elect Donald Trump’s inauguration later in the day. Additionally, US markets will remain closed on Monday in observance of Martin Luther King Jr. Day.

The US Dollar Index (DXY), which tracks the performance of the USD against six major currencies, hovers around 109.10 at the time of writing. Despite this, the Greenback finds some support as US Treasury yields rise, fueled by concerns over Trump’s proposed policies, including potential tariffs, extended tax cuts, and stricter immigration measures. Analysts suggest that the Federal Reserve’s (Fed) future interest rate decisions may hinge on how aggressively these policies are implemented.

Market participants will closely monitor Trump’s anticipated executive orders, expected to follow shortly after he takes office. Meanwhile, the Fed is widely expected to maintain current interest rates at its January meeting, with most economists surveyed by Reuters predicting a resumption of rate hikes in March.

The People’s Bank of China (PBOC) announced on Monday that it would keep its Loan Prime Rates (LPRs) unchanged. The one-year Loan Prime Rate (LPR) remains at 3.10%, while the five-year LPR stands at 3.60%. Since China and New Zealand are close trading partners, any shifts in China’s economy could have an impact on Antipodean markets.

The NZD also gained ground due to the robust economic data from China. China’s Gross Domestic Product (GDP) grew 5.4% over the year in the fourth quarter of 2024 after reporting a 4.6% expansion in the third quarter. Data beat the market consensus of 5% in the reported period, by a wide margin. Additionally, the annual December Retail Sales increased by 3.7% vs. the 3.5% expected and 3.0% prior, while Industrial Production arrived at 6.2% vs. the 5.4% forecast and November’s 5.4%.

• NZD/USD attracts some buyers to near 0.5600 in Monday’s early Asian session, up 0.20% on the day. 
• The PBoC left the one-year and five-year Loan Prime Rates (LPR) unchanged on Monday. 
• The Fed's dovish expectation could weigh on the USD and create a tailwind for the pair. 

The NZD/USD pair holds positive ground around 0.5600 during the Asian trading hours on Monday. The Kiwi remains strong after the People’s Bank of China (PBOC) announced to leave its Loan Prime Rates (LPRs) unchanged on Monday. The market might turn cautious as investors brace for the policy announcements ahead of President-elect Donald Trump’s inauguration. 

Early Monday, the Chinese central bank decided to hold the one-year and five-year LPR steady at 3.35% and 3.85%, respectively. However, the attention will shift to Trump's tariff policies. In December, Trump said that he would impose tariffs of as much as 10% on global imports and 60% on Chinese goods, plus a 25% import surcharge on Canadian and Mexican products. 

Any development in the Chinese economy generally impacts Kiwi, as China is New Zealand's largest trading partner. "A forceful start to Trump's new term could rattle nerves and give the dollar more support," noted Corpay currency strategist Peter Dragicevich.

On the other hand, the softer US inflation data and dovish comments from the US Federal Reserve (Fed) officials might cap the upside for the Greenback. Fed Governor Christopher Waller highlighted favorable inflation results that could warrant a rate reduction in the near term, adding that a rate cut in March remains a possibility if incoming data support further price moderation. 

• NZD/USD fell at the end of the weekresting around 0.5590 after struggling to sustain previous gains.
• RSI plunges to 40 in negative territory, pointing to weakening momentum as sellers regain confidence.
• MACD histogram shows rising green bars, hinting that not all bullish interest has faded despite the drop.

The NZD/USD pair lost ground on Friday, sliding 0.30% to settle near 0.5590. This downturn casts doubt on the sustainability of the pair’s recent consolidation above its 20-day Simple Moving Average (SMA), a region that might still offer a line of defense for buyers hoping to maintain upward traction. With sellers beginning to chip away at gains seen earlier in the week, it remains uncertain whether the pair can cling to its fragile support zone.

From a technical perspective, momentum readings are mixed. The Relative Strength Index (RSI) has retreated sharply to 40, underscoring a renewed bout of bearish pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram continues to produce green bars, suggesting that some underlying bullish sentiment persists but in a less confident manner. These conflicting signals underscore the delicate nature of the current price action.

Should NZD/USD consolidate effectively near the 20-day SMA, now around the 0.5600 mark, buyers may attempt another push higher, with 0.5630 serving as an interim hurdle before a potential run at 0.5650. Conversely, a decisive breach below 0.5580 would likely hand control back to the bears, exposing lower targets near the 0.5550 region and undermining the pair’s nascent support base.

NZD/USD daily chart

New Zealand Dollar (NZD) is expected to trade sideways between 0.5580 and 0.5630. In the longer run, NZD must break and remain above 0.5650 before a move to 0.5695 is likely, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Above 0.5650 NZD/USD can move to 0.5695

24-HOUR VIEW: "Yesterday, we expected NZD to 'trade in a sideways range of 0.5600/0.5650.' However, NZD traded in a lower range of 0.5582/0.5633, closing at 0.5608 (0.14%). The price action did not result in any increase in either downward or upward momentum. In other words, we continue to expect NZD to trade sideways, most likely between 0.5580 and 0.5630."

1-3 WEEKS VIEW: "We indicated yesterday (15 Jan, spot at 0.5620) that “although there has been a slight increase in momentum, NZD must break and remain above 0.5650 before a move to 0.5695 is likely.” There is no change in our view. The likelihood of NZD breaking clearly above 0.5650 will remain intact, provided that it remains above 0.5580 (‘strong support’ level)."

• NZD/USD depreciates as the US Dollar Index halts its four-day losing streak on Friday.
• Softer US Retail Sales and underlying inflation data reinforced the odds of the Fed cutting rates twice this year.
• The NZD could regain its ground due to the robust economic data from China.

NZD/USD extends its losses for the second successive day, trading around 0.5590 during the European hours on Friday. The downside of the NZD/USD pair can be attributed to a technical improvement in the US Dollar (USD).

The US Dollar Index (DXY), which tracks the US Dollar’s (USD) performance against six major currencies, halts its four-day losing streak, trading near 109.20 at the time of writing. However, the Greenback encountered difficulties as weaker US Retail Sales and underlying inflation data bolstered market expectations that the Fed will reduce interest rates twice this year.

US Retail Sales rose by 0.4% MoM in December, reaching $729.2 billion. This reading was weaker than the market expectations of a 0.6% rise and lower than the previous reading of a 0.8% increase (revised from 0.7%).

Moreover, the US core Consumer Price Index (CPI), which excludes volatile food and energy prices, rose by 3.2% year-over-year (YoY) in December, slightly below both the previous month's 3.3% increase and market forecasts of 3.3%. On a monthly basis, the core CPI grew by 0.2%, compared to a 0.3% rise in the prior month.

Chicago Federal Reserve Bank President Austan Goolsbee stated on Thursday that he has grown increasingly confident over the past several months that the job market is stabilizing at a level resembling full employment, rather than deteriorating into something worse, according to Reuters.

However, the NZD/USD pair faced challenges as the New Zealand Dollar (NZD) gained ground due to the robust economic data from New Zealand’s close trading partner China. China’s Gross Domestic Product (GDP) grew 5.4% over the year in the fourth quarter of 2024 after reporting a 4.6% expansion in the third quarter. Data beat the market consensus of 5% in the reported period, by a wide margin.

Chinese GDP rate rose 1.6% QoQ in Q4 2024, having increased 0.9% in the previous quarter. This figure matched the expectations of 1.6%. The annual December Retail Sales increased by 3.7% vs. the 3.5% expected and 3.0% prior, while Industrial Production arrived at 6.2% vs. the 5.4% forecast and November’s 5.4%.

• NZD/USD attracts some buyers to near 0.5610 in Friday’s Asian session. 
• China’s Q4 GDP grew at 5.4%, beating market expectations. 
• Fed’s Waller sees potential for multiple rate cuts this year. 

The NZD/USD pair edges higher to around 0.5610 during the Asian trading hours on Friday. The New Zealand Dollar (NZD) strengthens after the stronger-than-expected Chinese economic data. Investors will take more cues from the US Building Permits, Housing Starts and Industrial Production for December, which are due later on Friday. 

China’s Gross Domestic Product (GDP) expanded by 5.4% YoY in the fourth quarter (Q4) of 2024, as a flurry of stimulus measures began and helped boost Beijing’s growth, the National Bureau of Statistics (NBS) showed on Friday. This reading was stronger than the estimation of 5%, by a wide margin. On a quarterly basis, the Chinese economy grew 1.6% in Q4, compared to an increase of 0.9% in Q3. This figure was in line with the expectations of 1.6%.

Meanwhile, the country’s Retail Sales increased by 3.7% YoY in December versus 3.0 prior. Industrial Production came in at 6.2% from the previous reading of 5.4%. Both figures were above the market consensus. The upbeat Chinese economic data could boost the China-proxy Kiwi, as China is a major trading partner to New Zealand. 

On the other hand, the dovish remark from the US Federal Reserve (Fed) officials could drag the Greenback lower against the NZD. On Thursday, Fed Governor Christopher Waller said that the US central bank could cut the interest rates multiple times this year if inflation eases as he expected. 

Traders raise their bets for a slightly more aggressive pace of rate reduction following Waller’s remarks. Market-implied chance for a May move rose to nearly 50%, according to CME Group data. 

• NZD/USD eases on Thursday, hovering near 0.5610 in a cautious market mood.
• MACD histogram shows rising green bars, hinting at subdued but ongoing buyer interest.
• RSI sits at 45, slipping slightly yet staying within a mild negative zone.

The NZD/USD pair encountered modest pressure on Thursday, drifting 0.16% lower to roughly 0.5610. Despite this pullback, the exchange rate has managed to hold close to its 20-day Simple Moving Average (SMA), a signal that buyers could be attempting to build a floor under recent price action. While momentum remains tepid, the pair’s resilience at this critical threshold indicates a measured appetite for higher levels.

Technically, the Moving Average Convergence Divergence (MACD) histogram continues to print rising green bars, suggesting that, although not overwhelming, there is a degree of underlying demand. Meanwhile, the Relative Strength Index (RSI) has edged down to 45, reflecting a slight decline in bullish conviction without totally ceding ground to sellers. This delicate balance between optimism and caution leaves NZD/USD in a precarious spot.

Going forward, a sustained hold above the 20-day SMA near 0.5600 would underline the possibility of further gains, potentially guiding the pair toward the 0.5650 region. Conversely, a break beneath the immediate support could target 0.5580, with a deeper slide exposing 0.5550 if sentiment takes another negative turn.

NZD/USD daily chart

New Zealand Dollar (NZD) is expected to trade in a sideways range of 0.5600/0.5650. In the longer run, NZD must break and remain above 0.5650 before a move to 0.5695 is likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

NZD is expected to trade in a sideways range

24-HOUR VIEW: “We expected NZD to ‘trade in a 0.5570/0.5635 range’ yesterday. Our view was incorrect, as NZD soared to 0.5651. However, the advance was brief, as NZD fell quickly from the high to close at 0.5616 (+0.21%). As there has been no significant increase in upward momentum, NZD is unlikely to advance much further. Today, we expect it to trade in a sideways range of 0.5600/0.5650.”

1-3 WEEKS VIEW: “Our latest narrative was from Tuesday (14 Jan, spot at 0.5590), wherein ‘the recent whippy price action has resulted in a mixed outlook.’ We indicated that ‘for the time being, NZD could trade in a sideways range of 0.5540/0.5650.’ Yesterday, NZD rose and tested the upper bound of our expected range, reaching a high of 0.5651. It then pulled back to close at 0.5616, up by 0.21% for the day. Although there has been a slight increase in momentum, NZD must break and remain above 0.5650 before a move to 0.5695 is likely. The likelihood of NZD breaking clearly will increase in the next few days, provided that it remains above 0.5580 (‘strong support’ level).”

• NZD/USD tests the nine-day EMA at 0.5604, followed by the psychological level of 0.5600.
• The short-term price momentum is improved as the pair moves above the nine-day EMA.
• The pair finds its initial resistance at the 14-day EMA of 0.5614 level.

The NZD/USD pair breaks its three-day winning streak, trading around 0.5610 during the European hours on Thursday. The technical analysis of the daily chart indicates a persistent bearish bias as the pair is confined within a descending channel pattern.

The 14-day Relative Strength Index (RSI) remains below the 50 level, signaling an ongoing bearish bias. However, the NZD/USD pair moves above nine-day Exponential Moving Averages (EMA), reflecting an improvement in the short-term price momentum.

Regarding its support, the NZD/USD pair tests immediate nine-day EMA at 0.5604, aligned with the psychological level of 0.5600. A break below this level could lead the pair to navigate the region around its support area at 0.5526—its lowest point since October 2022, reached on December 25. Further support appears near the lower edge of its descending channel at the 0.5500 level.

On the upside, the NZD/USD pair tests initial resistance at the 14-day EMA at 0.5614 level. A break above this level could improve the short-term price momentum and support the pair to test the descending channel’s upper boundary at the psychological level of 0.5660 level.

NZD/USD: Daily Chart

• NZD/USD strengthened as December's US CPI data fueled speculation that the Fed might implement two interest rate cuts this year.
• US Core CPI increased 3.2% YoY in December, slightly below the expected 3.3% rise.
• The New Zealand Dollar strengthened on improved market sentiment following reports of the incoming Trump administration considering gradual tariff hikes.

NZD/USD remains above 0.5600 during the Asian hours on Thursday following three successive days of gains. The pair received gains as the US Dollar (USD) extended its downside following the cooler-than-expected US Consumer Price Index (CPI) inflation data for December raises the bet that the US Federal Reserve (Fed) could cut interest rates twice this year.

The US Consumer Price Index increased by 2.9% year-over-year in December, up from 2.7% in November, aligning with market expectations. On a monthly basis, CPI rose 0.4%, following a 0.3% increase in the previous month.

US Core CPI, which excludes volatile food and energy prices, rose 3.2% annually in December, slightly below November's figure and analysts' forecast of 3.3%. On a monthly basis, core CPI edged up 0.2% in December 2024.

The US Dollar Index (DXY), which gauges the US Dollar's performance against six major currencies, is trading near 109.00. Meanwhile, 2-year and 10-year US Treasury bond yields are at 4.27% and 4.66%, respectively. Both yields dropped by over 2% on Wednesday as softer US core CPI data fueled expectations that the Federal Reserve’s easing cycle may continue.

The risk-sensitive New Zealand Dollar (NZD) strengthened on improved market sentiment following reports from Bloomberg suggesting that US President-elect Donald Trump's economic team is considering a gradual approach to raising import tariffs, boosting investor confidence.

The NZD also found support from strong trade data out of China and Beijing's measures to stabilize the Yuan. However, its gains may be capped as markets expect the Reserve Bank of New Zealand (RBNZ) to cut its 4.25% cash rate by 50 basis points in February, reflecting the country's weak economic conditions.

• NZD/USD rises settling near 0.5615 as it flirts with the 20-day SMA.
• RSI jumps to 42, moving sharply upward yet still anchored in negative territory.
• MACD histogram prints decreasing green bars, highlighting a tempered recovery outlook.

The NZD/USD pair added a modest 0.30% on Wednesday, edging up to 0.5615 after extending gains beyond its 20-day Simple Moving Average (SMA). This marginal push above the moving average could be the catalyst bulls have been waiting for, provided it holds steady in the coming sessions. Sentiment has shown signs of improving from oversold levels, although the market tone remains cautious overall.

Technical readings suggest that momentum is beginning to shift. While the Relative Strength Index (RSI) has climbed to 42, indicating a hopeful uptick, it remains positioned in negative territory. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram is producing fewer green bars, signaling that, although buyers are gradually stepping in, the pair’s rebound remains fragile.

If NZD/USD can solidify its stance above the 20-day SMA near 0.5600, traders may eye further upside toward the 0.5650 resistance zone, with a move beyond this level potentially opening the door to 0.5700. Conversely, a drop back under 0.5580 would undermine the recent bounce and leave the pair vulnerable to retesting the 0.5550 handle or lower.

NZD/USD daily chart

New Zealand Dollar (NZD) is expected to trade in a range, most likely between 0.5570 and 0.5835. Whippy price action has resulted in a mixed outlook; for the time being, NZD could trade in a sideways range of 0.5540/0.5650, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD can trade in a sideways range of 0.5540/0.5650

24-HOUR VIEW: "We expected NZD to 'trade in a 0.5560/0.5620 range.' However, NZD traded in a higher range of 0.5580/0.5631, closing at 0.5604 (+0.38%). There has been no significant increase in upward momentum, and we continue to expect NZD to trade in a range, most likely between 0.5570 and 0.5635."

1-3 WEEKS VIEW: "There is not much to add to our update from yesterday (14 Jan, spot at 0.5590). As highlighted, the recent whippy price action 'has resulted in a mixed outlook.' For the time being, NZD could trade in a sideways range of 0.5540/0.5650."

• NZD/USD appreciates amid risk-on mood following reports of the incoming Trump administration considering gradual hikes in import tariffs.
• The US Dollar depreciated following the disappointing US December Producer Price Index data.
• The New Zealand Dollar receives support from robust trade data from China and Beijing's stimulus measures.

The NZD/USD cross extends its gains for the third consecutive day, trading near 0.5620 during European trading hours on Wednesday. The risk-sensitive New Zealand Dollar (NZD) benefits from improved market sentiment after reports, via Bloomberg, suggested that US President-elect Donald Trump's economic team is considering a gradual approach to increasing import tariffs, bolstering investor confidence.

Additionally, the upside of the NZD/USD pair could be attributed to the subdued US Dollar (USD) following the disappointing US December Producer Price Index (PPI) data. Market participants will keep an eye on the US Consumer Price Index (CPI) inflation data, which is due later on Wednesday.

US Producer Price Index for final demand rose 0.2% month-over-month in December after a 0.4% advance in November, softer than the 0.3% expected. The PPI climbed 3.3% YoY in December, the most since February 2023, after increasing 3.0% in November. This reading came in below the consensus of 3.4%.

The US Dollar may regain strength as hawkish sentiment builds around the Federal Reserve’s (Fed) policy outlook for January. According to the CME FedWatch tool, 30-day Fed Funds futures indicate a higher likelihood of just one interest rate cut from the Fed this year, contrasting with the two cuts projected in the Fed's latest dot plot from the Summary of Economic Projections (SEP).

The New Zealand Dollar gained support from robust trade data from China and Beijing's efforts to stabilize the Yuan. However, its upside remains limited as markets anticipate the Reserve Bank of New Zealand (RBNZ) will reduce its 4.25% cash rate by 50 basis points in February due to the country's weak economic conditions.

• NZD/USD trades with mild gains around 0.5600 in Wednesday’s Asian session. 
• US PPI came in softer than expected last month. 
• Expectations that Trump will impose graduated tariffs increasing by about 2% to 5% a month might help limit the pair’s losses. 

The NZD/USD pair posts modest gains to near 0.5600 on Wednesday during the Asian trading hours. The cooler-than-expected US December Producer Price Index (PPI) inflation data drags the US Dollar (USD) lower and creates a tailwind for the pair. 

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, weakens to around 109.20 after the PPI report. Data released by the US Bureau of Labor Statistics on Tuesday showed that the PPI rose by 3.3% YoY in December, compared to 3.0% in November. This reading came in softer than the market expectation of 3.4%. Meanwhile, the core PPI, excluding the volatile prices of food and energy, climbed 3.5% in December versus 3.4% prior, below the market consensus of 3.8%. 

Traders will shift their attention to the US December Consumer Price Index (CPI) inflation report, which is due later on Wednesday. A surprise upside in inflation could trigger the US Federal Reserve's (Fed) hawkish bets, supporting the Greenback and US Treasury yields. The potential US tariffs by Donald Trump and the new administration remained in the spotlight.

On the Kiwi front, reports published by Bloomberg suggested Trump might take a more strategic approach to imposing trade tariffs, which might bring some relief to the New Zealand Dollar (NZD). "Currency markets are breathing a sigh of relief after a report suggested that the incoming Trump administration could follow a 'gradual' trajectory in ratcheting tariffs higher," said Karl Schamotta, a foreign exchange analyst at Corpay.