The NZD/USD pair is looking to rise above 0.5750 during Wednesday’s Asian trading session. Expectations for a possible agreement between the United States and China support this move, along with the upcoming Bessent-He meeting in Malaysia. Chinese Vice President Han Zheng is optimistic about improving US-China relations before these discussions. However, US President Donald Trump has cast doubts on a future meeting with Chinese leader Xi Jinping in South Korea.

New Zealand’s Economic Dependence

New Zealand’s economy relies heavily on trade with China, especially exports. There are also expectations that the Reserve Bank of New Zealand may lower interest rates again due to low inflation concerns. The direction of the US Dollar will likely hinge on the September CPI data set to release on Friday. The New Zealand Dollar, or Kiwi, is sensitive to China’s economic performance and dairy prices due to its trade ties. The Reserve Bank of New Zealand’s interest rate decisions also affect the Kiwi’s value, as they aim to control inflation. Overall market sentiment plays a role too, with the NZD gaining strength in positive conditions and weakening during economic uncertainty. We are closely monitoring the NZD/USD pair as it remains just below the key 0.6000 level. The market is eagerly awaiting news from the upcoming APEC summit, where US and Chinese officials are expected to have important discussions about trade. Signs of improving relations would be beneficial for the Kiwi, similar to trends seen during negotiations in the late 2010s.

Economic Forecasts and Market Reactions

We believe that the Reserve Bank of New Zealand is nearing the end of its cycle of raising interest rates. Recent CPI data for Q3 in September 2025 shows that headline inflation has decreased to 2.8%, returning to the RBNZ’s target range of 1-3% after earlier inflationary pressures. This development has led markets to anticipate possible rate cuts by mid-2026, which could limit significant gains for the NZD. The main focus for the pair this week will be the upcoming US CPI data. The current expectation is for core inflation to slow to 3.1% year-over-year, suggesting that the Federal Reserve may have finished raising rates. A surprisingly low figure could weaken the US dollar and help push NZD/USD past resistance levels. We should also consider the Kiwi’s connection to commodity prices. After a tough period in 2024, dairy prices are beginning to stabilize, with the latest Global Dairy Trade auction showing a modest 2.5% increase. This creates a supportive base for the currency, provided global risk sentiment remains stable. With potential market volatility ahead, we see options as a smart strategy for positioning. Buying a straddle, which involves purchasing both a call and a put option at the same strike price near 0.6000, allows traders to profit from significant movements in either direction. Key levels to watch are a break above the 0.6050 resistance or a drop below the 0.5900 support level. Create your live VT Markets account and start trading now.

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