The New Zealand Dollar (NZD) continued its upward momentum on Wednesday, rising toward the 0.5950 level against the U.S. Dollar (USD). This marks the second consecutive daily gain for NZD/USD, driven by cooling U.S. inflation data and renewed optimism over U.S.-China trade relations.
🔻 U.S. Dollar Weakens After CPI Miss
Investor sentiment shifted after the U.S. Consumer Price Index (CPI) for April came in below expectations, rising 2.3% year-over-year—its lowest annual pace in over three years. Core CPI, excluding food and energy, held steady at 2.8%, while both monthly headline and core readings came in at 0.2%, softening the case for extended Fed hawkishness.
The weaker inflation print triggered a decline in U.S. Treasury yields and added downward pressure on the dollar, allowing risk-sensitive currencies like the New Zealand Dollar to advance.
🌏 Trump Hails China Ties, Sparks Kiwi Rally
Further lifting NZD sentiment, U.S. President Donald Trump described U.S.-China relations as “excellent” and confirmed efforts to expand access to Chinese markets. He hinted at possible direct talks with President Xi Jinping, raising hopes for a more comprehensive trade agreement.
Reports of a tariff reduction deal added fuel to the rally. Under this tentative pact, U.S. tariffs on Chinese goods are expected to drop from 145% to 30%, while Chinese tariffs on U.S. products may decline from 125% to 10%. Such a move could reduce global trade tensions, boosting commodity-driven currencies like the NZD.
📊 Domestic NZ Data Mixed; Eyes on Food Inflation
On the home front, New Zealand’s tourism sector continues to struggle, with Visitor Arrivals plunging 8.4% YoY in March to 311,800—marking the second consecutive monthly decline. Meanwhile, electronic card spending held steady at NZD 6.46 billion in April, showing no growth.
Looking ahead, traders are cautiously watching New Zealand’s April food inflation report, especially after March’s reading hit a 14-month high. A cooling in food prices may ease concerns around consumer inflation, potentially impacting the Reserve Bank of New Zealand’s policy tone.
📌 NZD/USD Technical Outlook
The pair is trading near a key resistance zone around 0.5950, with a break above potentially opening the door toward the 0.6000 psychological level. Immediate support is seen at 0.5880, followed by 0.5835.
🔍 What to Watch Next
- 🟢 U.S. PPI and Michigan Consumer Sentiment – key for Fed outlook
- 🟢 New Zealand Food Price Index (April) – inflation risk driver
- 🟢 Trade headlines from Washington and Beijing
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