In June 2025, New Zealand’s exports dropped to 6.63 billion NZD, down from 7.5 billion NZD. However, imports increased slightly to 6.49 billion NZD from 6.42 billion NZD. For the past year, New Zealand recorded a trade deficit of 4,366 million NZD. This was an increase from the previous deficit of 3,931 million NZD. Despite these changes in trade, the NZD/USD exchange rate stayed stable.

Bearish Signal for New Zealand Dollar

The decline in exports and the growing trade deficit signal weakness for the New Zealand dollar, which the market has not fully recognized yet. The currency’s minimal response to the significant drop in exports suggests a chance for traders to act. We recommend preparing for the NZD to weaken against major trading partners. This decline is likely due to reduced demand from important markets, a trend backed by recent global data. For instance, China’s official manufacturing purchasing managers’ index (PMI) recently dropped to 49.5, indicating a contraction that negatively affects demand for New Zealand’s main goods. We expect this external pressure to continue impacting export performance in the upcoming months. This notion is supported by falling commodity prices, especially in dairy, a key part of New Zealand’s export income. The Global Dairy Trade (GDT) price index, an important benchmark, fell by 1.3% in its latest auction. This price drop, combined with reduced export volumes, poses a strong challenge for the economy.

Focus on the Reserve Bank of New Zealand

Given the market’s subdued reaction, we believe that implied volatility on NZD options presents a good buying opportunity. Acquiring NZD/USD put options with expiration dates in the next one to two months seems to be a wise move. This strategy allows for a potential downward shift while limiting possible losses to the premium paid. This weak trade data will put a spotlight on the Reserve Bank of New Zealand. In the past, a sustained decline in trading terms has often led to a more dovish monetary policy to support the economy. We observed a similar trend during the global commodity price decline of 2014-2015, which resulted in rate cuts and a weaker currency. Moreover, continued strength in the U.S. economy could further influence this currency pair. Strong employment or inflation figures in the U.S. would support the Federal Reserve’s hawkish stance, bolstering the U.S. dollar. This would place additional downward pressure on the NZD/USD exchange rate, intensifying domestic economic weaknesses. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now