The NZD/USD pair jumps to around 0.5910, the highest since September 17, 2025, during the early Asian session on Friday. The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) after the hotter-than-expected inflation report. The attention will shift to the preliminary reading of the US S&P Global Purchasing Managers Index (PMI), which will be released later on Friday.
Data released by Statistics New Zealand on Friday showed that the country’s Consumer Price Index (CPI) climbed 3.1% YoY in the fourth quarter (Q4) of 2025, compared with a rise of 3.0% recorded in Q3. This figure came in hotter than the forecast of 3.0%. Meanwhile, the quarterly CPI inflation eased to 0.6% in Q4 from the previous reading of 1.0%, but above the market consensus of 0.5%.
These figures exceeded economists’ expectations and were above the Reserve Bank of New Zealand’s (RBNZ) target range, which boosted the Kiwi against the USD.
On the other hand, the upbeat US economic data could provide some support to the Greenback and create a headwind for the pair. The US economy grew in Q3 by 4.4%, slightly more than initially reported, bolstered by stronger exports and a smaller drag from inventories. Additionally, the Initial jobless claims came in at 200K last week, below the market consensus of 212K. Personal Spending rose at a solid pace in November, underscoring consumer resilience.
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.
