The NZD/USD pair edged higher during Monday’s Asian session, climbing toward the 0.5740–0.5750 zone as improved market sentiment supported risk-sensitive assets. The New Zealand Dollar (NZD) found renewed strength against the US Dollar (USD) amid hopes that the United States (US) may ease its latest escalation in the trade dispute with China.
Trump’s softer stance eases market nerves
After threatening to impose 100% tariffs on Chinese goods starting November 1, former US President Donald Trump moderated his rhetoric over the weekend, saying that “China’s economy will be fine” and that the US intends to “help China, not hurt it.”
The shift in tone has helped stabilize global risk sentiment, benefiting commodity-linked currencies such as the Kiwi, which is often viewed as a proxy for Chinese economic prospects due to New Zealand’s close trade ties with China.
US political uncertainty weighs on the Greenback
The ongoing US government shutdown—now in its third week—continues to create headwinds for the USD. Lawmakers remain at an impasse over budget negotiations, with the Senate not expected to vote on funding measures until Tuesday. Prolonged political gridlock could hurt consumer confidence and growth expectations, adding pressure on the Greenback and lending near-term support to NZD/USD.
RBNZ’s dovish bias limits upside potential
Despite the Kiwi’s recent rebound, gains may remain limited due to the Reserve Bank of New Zealand’s (RBNZ) dovish monetary stance. The central bank slashed its benchmark rate by 50 basis points (bps) last week and signaled openness to further easing if inflation and growth fail to pick up.
Market participants are now pricing in an additional 25 bps cut to 2.25% at the RBNZ’s November policy meeting. The divergence between the RBNZ’s dovish approach and the Fed’s expected rate cuts later this year could keep NZD/USD volatile but broadly supported in the near term.
