NZD/USD drops below 0.5600 amid US dollar recovery and mixed data
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NZD/USD continued its downward trend for the second day in a row, slipping to 0.5590 during Friday’s European session. The decline reflects a technical rebound in the US Dollar (USD), which has managed to pause its four-day losing streak.
US dollar rebounds despite weak data
The US Dollar Index (DXY), which tracks the USD against six major currencies, climbed near 109.20, showcasing resilience despite softer-than-expected US economic data. Market participants were influenced by weaker Retail Sales and inflation figures, which have reinforced expectations of two Federal Reserve rate cuts later this year.
US Retail Sales increased by 0.4% month-on-month in December, reaching $729.2 billion. However, this was below market expectations of a 0.6% rise and marked a decline from the revised 0.8% increase in November.
Core Consumer Price Index (CPI), excluding volatile food and energy prices, grew by 3.2% year-over-year in December. This figure fell short of the 3.3% forecast and the previous month’s 3.3%. On a monthly basis, core CPI grew by 0.2%, moderating from November’s 0.3% gain.
Chicago Federal Reserve President Austan Goolsbee expressed confidence in the stabilization of the US job market, further tempering fears of a potential economic slowdown.
Chinese data offers support for the NZD
Despite headwinds, the New Zealand Dollar (NZD) found partial support from strong economic data out of China, a key trading partner for New Zealand. China’s Gross Domestic Product (GDP) expanded by 5.4% year-over-year in Q4 2024, exceeding market expectations of 5% and outpacing the 4.6% growth recorded in Q3.
Quarter-on-quarter, Chinese GDP rose by 1.6% in Q4, meeting forecasts and outperforming the previous quarter’s 0.9% increase. Robust performance was also evident in December’s Retail Sales, which grew 3.7% year-over-year, surpassing both the 3.5% forecast and November’s 3% growth.
Industrial Production added further optimism, jumping 6.2% year-over-year compared to the anticipated 5.4% and November’s 5.4% reading.
Outlook for NZD/USD
While the US Dollar’s technical recovery pressures NZD/USD, strong Chinese economic performance could lend support to the Kiwi in the medium term. Traders are likely to remain cautious ahead of further economic updates from both the US and New Zealand, with a focus on central bank actions and evolving global economic conditions.
US dollar rebounds despite weak data
The US Dollar Index (DXY), which tracks the USD against six major currencies, climbed near 109.20, showcasing resilience despite softer-than-expected US economic data. Market participants were influenced by weaker Retail Sales and inflation figures, which have reinforced expectations of two Federal Reserve rate cuts later this year.
US Retail Sales increased by 0.4% month-on-month in December, reaching $729.2 billion. However, this was below market expectations of a 0.6% rise and marked a decline from the revised 0.8% increase in November.
Core Consumer Price Index (CPI), excluding volatile food and energy prices, grew by 3.2% year-over-year in December. This figure fell short of the 3.3% forecast and the previous month’s 3.3%. On a monthly basis, core CPI grew by 0.2%, moderating from November’s 0.3% gain.
Chicago Federal Reserve President Austan Goolsbee expressed confidence in the stabilization of the US job market, further tempering fears of a potential economic slowdown.
Chinese data offers support for the NZD
Despite headwinds, the New Zealand Dollar (NZD) found partial support from strong economic data out of China, a key trading partner for New Zealand. China’s Gross Domestic Product (GDP) expanded by 5.4% year-over-year in Q4 2024, exceeding market expectations of 5% and outpacing the 4.6% growth recorded in Q3.
Quarter-on-quarter, Chinese GDP rose by 1.6% in Q4, meeting forecasts and outperforming the previous quarter’s 0.9% increase. Robust performance was also evident in December’s Retail Sales, which grew 3.7% year-over-year, surpassing both the 3.5% forecast and November’s 3% growth.
Industrial Production added further optimism, jumping 6.2% year-over-year compared to the anticipated 5.4% and November’s 5.4% reading.
Outlook for NZD/USD
While the US Dollar’s technical recovery pressures NZD/USD, strong Chinese economic performance could lend support to the Kiwi in the medium term. Traders are likely to remain cautious ahead of further economic updates from both the US and New Zealand, with a focus on central bank actions and evolving global economic conditions.