China’s Economic Influence
China’s economic changes can affect the NZD because New Zealand relies heavily on trade with China, particularly in dairy exports. Recent actions from the US Federal Reserve, such as an interest rate cut and ongoing reduction of quantitative easing (QE), also influence currency trends.
Fed Chair Jerome Powell stated that the economic outlook has not changed, but a potential rate cut in December is uncertain. At the same time, the NZD’s performance is linked to general market sentiment and economic data, with stronger growth attracting foreign investments.
When market conditions are positive, the NZD tends to rise, but it weakens during times of economic uncertainty. The Reserve Bank of New Zealand’s decisions on interest rates are crucial in guiding the currency’s fluctuations.
Looking back, we remember how optimism around events like the Trump-Xi meetings boosted the NZD. However, by late October 2025, the focus has shifted from large trade deals to specific geopolitical tensions, leading to a different climate for risk sentiment. This suggests that any positive news might lead to shorter rallies compared to the past.
Federal Reserve’s Position
The Federal Reserve’s situation now is quite different from the rate cuts we saw in the past. Currently, the Fed funds rate remains steady at around 4.75%, as the central bank aims to fully control inflation. This difference in policy, especially compared to the more cautious Reserve Bank of New Zealand (RBNZ), provides ongoing support for the US Dollar.
In New Zealand, the current economic data tells a more complex story than the past surge of confidence. The recent ANZ Business Confidence for October 2025 is at a more moderate +18, down significantly from the previous 58.1. This decline indicates that the domestic economy is not generating the same strong momentum for the Kiwi dollar.
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