The NZD/USD pair recovered from a seven-month low of 0.5605 recorded in the previous session, trading around 0.5630 during Monday’s Asian session. The New Zealand dollar (NZD) found support after the release of stronger-than-expected inflation data from China, its largest trading partner.
China’s inflation data boosts kiwi sentiment
China’s Consumer Price Index (CPI) rose 0.2% year-on-year in October, rebounding from a 0.3% decline in September and surpassing market expectations for no change. On a monthly basis, CPI inflation increased 0.2%, up from 0.1% previously. Meanwhile, the Producer Price Index (PPI) fell 2.1% year-on-year, an improvement from September’s 2.3% drop and slightly better than the forecast of -2.2%.
The data suggests early signs of stabilization in China’s price pressures, offering a modest boost to risk sentiment and commodity-linked currencies such as the kiwi.
Easing US-China tensions add further support
The NZD also benefited from easing trade tensions between the United States and China. China’s Ministry of Commerce announced it would temporarily lift its ban on approving exports of “dual-use items” related to gallium, germanium, antimony, and super-hard materials to the US. The suspension will remain in place until November 27, 2026, signaling a further thaw in trade relations between the two largest economies.
USD strength limits upside as US shutdown deal nears
Despite the kiwi’s rebound, upside momentum may remain limited as the US dollar (USD) gains modest support amid progress toward ending the US government shutdown. According to Bloomberg, centrist Senate Democrats have agreed to back a proposal to reopen the government and fund certain agencies through next year.
The deal would ensure federal employees receive back pay and allow states to resume delayed transfers, with partial funding extended through January 30 while some departments receive full-year allocations. This progress has helped restore confidence in US fiscal stability, providing a mild lift to the Greenback and capping NZD/USD’s gains.
