NZD/USD is currently doing well, trading above 0.5700 and reaching about 0.5720 during Wednesday’s Asian session. In September, China’s Consumer Price Index (CPI) fell by 0.3% year-on-year, which was more than expected, while the Producer Price Index (PPI) dropped by 2.3%. The decrease in China’s deflation helps the NZD since China is New Zealand’s biggest trading partner. However, the ongoing trade tensions between the U.S. and China might limit the NZD’s growth.

US Federal Shutdown Impact

The U.S. federal shutdown may negatively impact the U.S. Dollar, potentially benefiting NZD/USD. The Senate’s inability to pass a bill to end the shutdown affects the currency’s behavior. The value of the New Zealand Dollar is influenced by New Zealand’s economy and central bank policies. High dairy prices and a strong Chinese economy positively affect the NZD because of their export ties. The Reserve Bank of New Zealand (RBNZ) adjusts interest rates to maintain inflation, which impacts the NZD by influencing investor interest. Higher interest rates make the NZD more attractive, while lower rates can weaken it. Economic data plays a crucial role for the NZD. Strong growth and low unemployment can lead to higher interest rates. Additionally, risk sentiment affects the NZD, as it tends to appreciate in stable environments but may fall during economic uncertainty.

Support For NZD/USD Pair

The NZD/USD pair seems to find support above 0.5700, similar to late 2023. Back then, concerns about deflation in China heavily impacted the Kiwi. However, recent data from September 2025 shows China’s CPI stabilized at a more positive 0.6% year-over-year, indicating a stronger economic position. On the other hand, the situation in the U.S. differs significantly from the government shutdown fears of 2023. The U.S. Dollar is currently benefiting from a hawkish Federal Reserve, as new inflation data from September 2025 shows a stubborn 3.9%. This pushes market expectations for a Fed rate cut further into mid-2026, keeping the Greenback appealing. At the same time, the Reserve Bank of New Zealand is adopting a more dovish approach as New Zealand’s Q3 2025 inflation cooled to 3.5%, moving closer to its target. This stands in contrast to the Fed’s position and creates a natural limit for the NZD/USD exchange rate. The interest rate difference currently favors the U.S. by over 200 basis points, a key factor we are monitoring. With these conflicting signals—a recovering China versus a robust U.S. Dollar—we expect the pair to trade within a relatively narrow range in the upcoming weeks. For derivative traders, strategies like selling strangles or condors, which profit from low market activity, might be beneficial. We anticipate a trading range between 0.5650 and 0.5850. We should also be aware of broader market sentiment, as the Kiwi is a risk-sensitive currency. Any increase in global geopolitical tensions could lead to a shift toward the safety of the U.S. Dollar, a trend we’ve observed repeatedly over the past two years. Thus, holding long positions on the NZD carries extra risk right now. Create your live VT Markets account and start trading now.

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