NZD/USD has seen slight gains, trading at 0.5790, up 0.10% following a weaker US ADP employment report. This occurs in a cautious market as investors await upcoming US services data and China’s December Trade Balance figures.

Impact of Chinese Trade Balance

The New Zealand dollar (NZD) is gaining some strength due to economic factors, particularly its reliance on Chinese trade. Expectations are high for China’s December Trade Balance, which is crucial for the NZD because New Zealand heavily exports to China. In December, the US ADP reported a rise of 41,000 in private sector jobs, falling short of the forecasted 47,000 but still recovering from November’s decline. Smaller businesses showed job recovery, while larger firms cut back on hiring, providing only slight support to the US Dollar. Attention is focused on upcoming US economic indicators like the ISM Services PMI and JOLTS Job Openings, which could influence Federal Reserve policy. With US data momentum unchanged, the NZD/USD is mainly driven by China’s economic outlook and global risk sentiment. The New Zealand Dollar also performed well against major currencies, notably rising 0.11% against the US Dollar, 0.06% against the Euro, and 0.15% against the Pound. These changes highlight the NZD’s relative strength in a mixed currency market. We see a familiar trend forming in NZD/USD, similar to early 2025 when the market reacted to weak US private employment data while awaiting key Chinese trade numbers. This created a cautious but slightly positive outlook for the Kiwi dollar.

Current Market Context

In the first week of 2026, the situation feels similar. The NZD is trading around 0.5850. The US labor market is again sending mixed signals; the most recent ADP report for December 2025 indicated 164,000 new jobs, which was stronger than expected. However, the latest JOLTS data for November 2025 showed job openings decreased to 8.79 million, the lowest since early 2023, hinting at a cooling job market. A key difference this year is that China’s December 2025 trade balance has already been released, showing a modest 2.3% rise in exports. This positive result, which was merely expected last year, provides a stronger base for the New Zealand dollar and boosts the outlook for New Zealand’s commodity exports, particularly dairy and meat. This scenario suggests considering strategies that could benefit from potential NZD strength against a weakening USD. Buying NZD/USD call options may be a good way to exploit further gains, particularly if upcoming US inflation data indicates continued easing. This strategy allows traders to manage their risk while positioning for a possible rally. However, we must also keep an eye on New Zealand’s domestic situation, as inflation at the end of 2025 remained high at 4.7%, well above the central bank’s target. This persistent inflation may impact the Reserve Bank of New Zealand’s policy decisions, which could limit the Kiwi’s gains or trigger volatility unrelated to US or Chinese developments. Create your live VT Markets account and start trading now.

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