Impact of China’s Economic Data

During Friday’s Asian trading session, the NZD/USD dropped to about 0.5620. This fall happened after China’s trade surplus for October decreased to $90.07 billion, down from $90.45 billion in September, and missed expectations of $95.60 billion. In October, China’s exports grew by only 1.1% year-over-year, below the expected 3.0%. Imports rose by just 1.0%, falling short of the anticipated 3.2%. This situation could negatively impact New Zealand’s economy, as China is its main trading partner. Additionally, New Zealand’s unemployment rate increased to 5.3% in the third quarter, the highest level since 2016. This data supports the case for the Reserve Bank of New Zealand to cut rates by 25 basis points on November 26. In the U.S., job cuts surged in October, with companies eliminating over 150,000 positions, marking the largest drop in over 20 years. The chances of the U.S. Federal Reserve cutting rates in December rose to 70%, up from 62% the previous day. Economic data from New Zealand and China has a big impact on the NZD, with dairy prices also influencing its value. Decisions by the Reserve Bank of New Zealand and overall market sentiment further affect the currency. Today, November 7, 2025, the NZD/USD pair is under pressure due to China’s worse-than-expected trade figures. This is significant because New Zealand heavily relies on exports to China, and the market seeks indications of whether this slowdown is part of a larger trend.

Market Reactions and Strategies

The economic slowdown in China appears to be widening. The official NBS Manufacturing PMI for October 2025 fell to 49.5, suggesting a contraction. This weakness from our largest trading partner poses challenges for the Kiwi dollar. Derivative traders should note that additional negative data from China could drive NZD/USD lower. Domestic pressures also exist, as New Zealand’s unemployment rate rose to 5.3% from 5.1% last quarter, the highest since 2016. This increase almost ensures the RBNZ will lower its cash rate from 2.75% on November 26, which weighs down the New Zealand dollar. Conversely, the U.S. dollar shows signs of weakness too. Last week’s Non-Farm Payrolls report for October 2025 only added 120,000 jobs, well below expectations. This fuels speculation that the Fed will cut rates in December, complicating a straightforward short position on NZD/USD. Since both the RBNZ and the Fed are likely to cut rates, we find ourselves in a “race to the bottom” for interest rates. This environment could lead to increased volatility in the NZD/USD pair as markets react to the most dovish central bank. Traders might explore strategies like straddles or strangles to profit from significant price movements in either direction instead of simple directional bets. Another strategy is to analyze cross-currency pairs to pinpoint weaknesses. For instance, if NZD weakness is more pronounced than that of other commodity currencies, pairing it against the AUD might create a clearer trading opportunity. Historically, during global slowdowns like that of the late 2010s, commodity currencies diverged, presenting opportunities. Create your live VT Markets account and start trading now.

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