NZD/USD gathers strength above 0.5700 after New Zealand’s CPI inflation data
- NZD/USD gains traction to around 0.5730 in Monday’s early Asian session.
- New Zealand’s CPI inflation jumped to 3.0% YoY in Q3, as expected.
- The US government shutdown becomes the third-longest in history with no end in sight.
The NZD/USD pair gathers strength to near 0.5730 during the early Asian session on Monday. The New Zealand Dollar (NZD) edges higher against the US Dollar (USD) after the release of consumer price inflation data. Later on Monday, traders will closely monitor China’s Q3 Gross Domestic Product (GDP), along with Industrial Production and Retail Sales reports for September.
Data released by Statistics New Zealand on Monday showed that New Zealand’s Consumer Price Index (CPI) climbed 3.0% YoY in the third quarter (Q3) of 2025, versus 2.7% in Q2. This figure came in line with the expectation. The quarterly CPI inflation rose to 1.0% in Q3 from the previous print of 0.5%.
The hotter New Zealand CPI inflation data provide some support to the NZD against the USD. Nonetheless, traders will take more cues from China’s economic data later on Monday. The Chinese economy is estimated to grow 4.8% YoY in Q3. China’s Industrial Production is expected to rise 5.0% YoY in September, while the Retail Sales are projected to increase 2.9% YoY during the same period. In case of a weaker-than-expected outcome, this could weigh on the China-proxy Kiwi, as China is a major trading partner for New Zealand.
On the USD’s front, the ongoing US federal government shutdown might exert some selling pressure on the Greenback and act as a tailwind to the pair. The government shutdown has entered its 19th day with no end in sight, after senators failed for the 10th time to resolve the impasse in votes on Thursday. The shutdown is now the third-longest funding lapse in modern history.
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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