During the Asian trading hours on Monday, buyers showed interest in the NZD/USD pair around 0.5785. The New Zealand dollar has been losing ground against the US dollar following recent trade balance data from China. Attention is now shifting toward the upcoming interest rate decision by the US Federal Reserve on Wednesday.
The data released by China’s National Bureau of Statistics reveals that the country’s trade surplus expanded to 111.68 billion in November, up from 90.07 billion in October, surpassing the anticipated 100.2 billion. This marks the largest surplus since June, driven primarily by strong export performance.
In terms of exports, there was a notable increase of 5.7% in November, compared to a modest rise of 1.1% a year earlier. Imports, on the other hand, rose by 1.9%, slightly up from the previous increase of 1.0%. Given that China is New Zealand’s key trading partner, a substantial trade surplus may be interpreted as a positive signal for China’s economic strength, indirectly boosting the New Zealand dollar as a proxy for Chinese trade.
The Federal Reserve is set to conduct its final meeting of the year, with market expectations leaning toward a third consecutive interest rate cut. This move could put additional pressure on the US dollar, potentially benefiting the NZD/USD pair. Current market projections estimate a nearly 90% likelihood of a 25 basis point reduction to the target range of 3.50-3.75%, according to the CME FedWatch tool.
After the meeting, Fed Chairman Jerome Powell will hold a press briefing. His remarks might shed light on future US interest rate policies. If he expresses a somewhat hawkish stance despite a rate cut, it could lend some temporary support to the US dollar.
