NZD/USD rises to near 0.5800 following NZIER Q4 Business Confidence
- NZD/USD rises as NZIER Business Confidence jumps to 48% in Q4 2025, the highest since March 2014.
- NZIER’s Christina Leung said lower rates are feeding through, with the economic recovery gaining traction.
- Traders await December US CPI data on Tuesday for clues on the Federal Reserve’s policy path.
NZD/USD gains ground for the second successive session, trading around 0.5780 during the Asian hours on Tuesday. The pair rises as the New Zealand Dollar (NZD) gains support after domestic Business Confidence climbed to 48% quarter-over-quarter in the fourth quarter (Q4) of 2025, its highest level since March 2014, up from 18% in the third quarter, according to the New Zealand Institute of Economic Research’s (NZIER) Quarterly Survey of Business Opinion.
Christina Leung, principal economist at NZIER, said the survey shows lower interest rates are finally feeding through to the economy and the recovery is gaining traction. Leung added that the improvement in sentiment was broad-based across sectors and regions, Reuters reported.
The upside of the NZD/USD pair could be restrained as the US Dollar (USD) edges higher ahead of the Consumer Price Index (CPI) data for December due later in the day. Traders could gain fresh clues on the Federal Reserve’s (Fed) policy path.
Markets are pricing in two Federal Reserve rate cuts this year, starting in June, though an upside inflation surprise could curb easing prospects. December’s Nonfarm Payrolls (NFP) missed expectations, reinforcing a more dovish Fed outlook. The CME Group's FedWatch tool shows that Fed funds futures price in about 95% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
Traders remain cautious amid growing worries about the Fed's independence. Federal prosecutors threatened to indict Fed Chair Jerome Powell over his congressional testimony on a building renovation, raising concerns over the Fed’s independence. Investors are also awaiting a US Supreme Court ruling on the legality of President Donald Trump’s tariff policies, expected on Wednesday.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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