The NZD/USD pair saw some gains due to New Zealand’s recent inflation data and positive economic news from China. However, the prices stayed below the mid-0.5700s during the Asian session.

New Zealand Inflation and Chinese Growth

New Zealand’s Consumer Price Index (CPI) increased by 1.0% in Q3, up from 0.5% in the previous quarter. The annual inflation rate is now 3.0%, compared to 2.7% before. Meanwhile, China’s GDP grew by 4.8% in Q3 2025, with industrial production rising by 6.5% and retail sales by 3%. US President Donald Trump mentioned that imposing a full-scale tariff on China would not be feasible, which eased concerns about trade tensions. This positively impacted the NZD/USD pair, along with the US Federal Reserve’s indications regarding possible interest rate cuts. The US Dollar is facing challenges due to worries about the effects of a long government shutdown on economic performance. These conditions have kept interest in the NZD/USD pair strong, as traders look ahead to upcoming US inflation data. Economic indicators also influence the market, with China’s GDP serving as a key measure of economic activity. These data changes impact currency movements, focusing on future releases and overall economic health. Given New Zealand’s strong inflation and China’s positive economic data, the outlook for the NZD/USD pair looks good. Traders might want to buy call options to take advantage of potential price increases while limiting their risk to the premium they pay.

New Zealand Reserve Bank Strategy

With New Zealand’s annual inflation at 3.0%, it sits at the top of the Reserve Bank of New Zealand’s target range. This situation may prevent the RBNZ from cutting rates, giving the Kiwi a yield advantage. The market may view this as a hawkish sign, providing a solid support level for the currency. Strong Chinese data, especially the 4.8% GDP growth, is also a big boost for the New Zealand dollar. This indicates a recovery from the economic slowdown and property sector troubles that have been in the spotlight throughout 2024. As China’s economy improves, demand for New Zealand’s exports should rise, further supporting the NZD. On the flip side, the US dollar seems weak due to expectations of more rate cuts from the Federal Reserve. The Fed has already reduced rates from the peaks of over 5.25% seen in 2023. Further cuts this year could diminish the dollar’s attractiveness compared to currencies with more stable or aggressive central banks. With the NZD/USD pair currently hovering below the mid-0.5700s before the US inflation data release, a cautious but optimistic strategy is advisable. A bull call spread strategy—buying one call option and selling another at a higher strike price—could be beneficial. This tactic lowers initial costs and positions traders for a possible breakout after the US data is revealed. More aggressive traders might consider selling out-of-the-money put options, set to expire after this Friday’s US inflation report. This approach allows for collecting a premium amidst the current uncertainty. It bets that strong fundamentals in New Zealand and a weak USD will keep the NZD/USD from dropping significantly, even if US inflation exceeds expectations. Create your live VT Markets account and start trading now.

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