The NZD/USD pair is staging a modest recovery on Thursday, trading near 0.5970 in the Asian session after sliding more than 1% in the previous session. The rebound is fueled by renewed optimism over potential progress in US-China trade relations and fresh stimulus measures from China, New Zealand’s largest trading partner.
Trade Talks and China Stimulus Lift Sentiment
Investors welcomed news that US Treasury Secretary Scott Bessent will meet Chinese Vice Premier He Lifeng in Switzerland on Saturday. The meeting marks a key effort to restart stalled trade negotiations and de-escalate tariff tensions that have rattled global markets.
China’s proactive response to economic headwinds is also aiding sentiment. Beijing is ramping up stimulus efforts to counter the impact of trade-related pressures, offering indirect support to the export-reliant New Zealand economy.
NZ Outlook: Volatility Persists, But Optimism Grows
New Zealand Prime Minister Christopher Luxon noted on Thursday that while markets experienced sharp volatility in April, conditions have since partially stabilized. He acknowledged persistent global uncertainty but voiced optimism about New Zealand’s economic recovery trajectory.
However, Reserve Bank of New Zealand (RBNZ) Deputy Governor Christian Hawkesby struck a more cautious tone. He warned that global trade disruptions—particularly stemming from US tariff policy—remain a key vulnerability. Hawkesby cited weak labor data and ongoing dysfunction in global markets as significant risks to the domestic outlook.
Fed Policy and USD Outlook
The US Dollar Index (DXY) is holding steady near 99.70, underpinned by the Federal Reserve’s cautious policy stance. On Wednesday, the Fed held its benchmark rate steady at 4.25%–4.50%, acknowledging rising inflation and employment risks. The market is still pricing in a 25-basis-point rate cut for July, though policymakers remain non-committal.
Outlook: Rangebound Bias with Trade Talks in Focus
The NZD/USD pair remains vulnerable to global policy shifts but is currently buoyed by improved risk sentiment. Key near-term support lies at 0.5930, with resistance seen near 0.6000 and 0.6025. Sustained progress in US-China trade negotiations and additional signals from the RBNZ or Fed will likely dictate the next decisive move.
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