The NZD/USD pair trades in positive territory near 0.6055 during the early Asian session on Thursday. The New Zealand Dollar (NZD) edges higher against the Greenback amid encouraging New Zealand’s Trade Balance data. Traders will keep an eye on the US weekly Initial Jobless Claims report, which will be released later on Thursday.
New Zealand posted a trade surplus of NZ$52 million MoM in December 2025, compared to a deficit of NZ$163 million in November. This figure came in better than the forecasted surplus of NZ$30 million. Exports rose to NZ$7.65 billion versus NZ$6.99 billion, while Imports climbed to NZ$7.60 billion, compared to NZ$7.15 billion in the previous reading. A stronger trade position could provide some support to the Kiwi against the US Dollar (USD) in the near term.
The Federal Open Market Committee (FOMC) voted 10-2 on Wednesday to hold the benchmark federal funds rate in a range of 3.5%-3.75%. Governors Christopher Waller and Stephen Miran dissented in favor of a 25-basis-point (bps) reduction.
Fed Chair Jerome Powell said that the outlook for economic activity has improved and the central bank will assess incoming economic data before deciding on future interest rate reductions. “Monetary policy is not on a preset course, and we will make our decisions on a meeting-by-meeting basis,” Powell said. The hawkish hold from the Fed reduced the odds of a rate cut at the next meeting, which could lift the USD and create a headwind for the pair.
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
