The NZD/USD pair edges higher toward 0.5785 during Monday’s Asian session. The New Zealand Dollar (NZD) finds mild support after China’s latest Trade Balance release, though it remains weaker overall against the US Dollar (USD). Market attention now shifts to Wednesday’s US Federal Reserve (FED) interest rate decision.
Data from China’s National Bureau of Statistics on Monday showed that the country’s Trade Surplus rose to 111.68B in November, up from 90.07B in October and well above the expected 100.2B. This marks the largest surplus since June, driven by stronger export performance relative to imports.
Meanwhile, Exports increased by 5.7% YoY in November (vs. 1.1% previously), while Imports rose by 1.9% (vs. 1.0% prior). A significantly wider Trade Surplus is generally interpreted as a sign of economic resilience, which tends to support the China-proxy NZD, given China’s major role as New Zealand’s largest trading partner.
The FED will hold its final policy meeting of the year this week, with investors broadly expecting a third consecutive rate cut on Wednesday. Such a move would likely weigh on the USD and provide a tailwind for NZD/USD. According to the CME FedWatch Tool, markets have priced in nearly a 90% probability of a 25 bps cut to the 3.50%–3.75% target range.
FED Chair Jerome Powell will speak at the post-meeting press conference, where his tone will be critical for markets. Should Powell deliver a “hawkish cut,” the USD could find some short-term support despite the reduction in interest rates.
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