The NZD/USD exchange rate has slightly risen after China announced it will suspend some tariffs on U.S. agricultural products. Since China is New Zealand’s biggest trading partner, this news positively impacts the New Zealand Dollar. The suspension affects 24% tariffs and starts on November 10, lasting for a year, which has improved market feelings.

Challenges in New Zealand

New Zealand, however, is facing some tough challenges. The Unemployment Rate rose to 5.3% in the third quarter, the highest since 2016. Employment Change showed no growth, raising the likelihood of a rate cut by the Reserve Bank of New Zealand at its meeting in November. The participation rate fell to 70.3%, while private wages increased by just 0.5% from the previous quarter. In the U.S., the USD is under pressure due to an ongoing budget deadlock, leading to a partial government shutdown that has lasted six weeks. The ISM Services PMI reported a slight rise to 52.4, showing the labor market remains stable. Current forecasts indicate there’s a 62% chance of another Federal Reserve rate cut in December. Recently, the New Zealand Dollar has performed best against the Japanese Yen, as shown in the currency table. Other major currencies experienced mixed results against one another, and the heat map illustrates these percentage changes in the currency market. As of November 6, 2025, the underlying weakness of the New Zealand dollar may outweigh any short-term gains from China’s tariff news. The boost from this announcement is likely temporary, especially considering New Zealand’s weak labor market. The increased unemployment rate of 5.3% provides a strong reason for the Reserve Bank of New Zealand (RBNZ) to consider cutting interest rates.

Strategic Considerations

We should prepare for a lower NZD/USD exchange rate before the RBNZ meeting on November 26. Buying NZD/USD put options that expire in December could be a smart move to benefit from the expected interest rate cut. The 5.3% unemployment rate continues a worrying trend we have seen over the past two years, as it has risen steadily from below 4% in 2023. History shows how sensitive the Kiwi is to these changes, as evidenced by the aggressive RBNZ rate cut in August 2019, which caused the currency to drop. With the market already expecting a 25-basis-point cut this month, any indication of further easing in early 2026 may lead to a quicker decline in the New Zealand dollar. This suggests a bearish outlook for the currency. While the U.S. dollar also faces challenges like the ongoing government shutdown, the RBNZ’s path is clearer. The 62% chance of a Federal Reserve cut in December is less certain than the highly likely cuts from the RBNZ. In the coming weeks, the RBNZ’s definite actions could weigh more heavily, indicating that the New Zealand dollar has more potential to fall than the U.S. dollar. Create your live VT Markets account and start trading now.

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