The New Zealand Dollar (NZD) continued to rise against the US Dollar (USD) for the second consecutive session on Wednesday, trading around 0.5940 during the Asian trading hours. The pair strengthened as the US Dollar came under pressure following softer-than-expected US inflation data.
US Consumer Price Index (CPI) figures revealed a 2.3% year-over-year increase in April, slightly below the 2.4% rise recorded in March and market expectations. Core CPI, which excludes volatile food and energy prices, rose 2.8% annually, in line with the previous month and consensus estimates. On a monthly basis, both headline and core CPI increased by 0.2% in April.
US-China Trade Optimism and Tariff Reductions Support NZD
The US Dollar’s weakness was further fueled by comments from US President Donald Trump, who told Fox News that he is working to expand access to Chinese markets and described US-China relations as “excellent.” Trump also expressed willingness to engage in direct talks with Chinese President Xi Jinping to reach a broader trade agreement.
Commodity-linked currencies, including the New Zealand Dollar, are likely to continue benefiting from news that the US and China have reached a preliminary agreement to significantly reduce tariffs. Under the deal, US tariffs on Chinese goods would drop from 145% to 30%, while China would lower tariffs on US imports from 125% to 10%. This move is widely seen as a significant step toward easing the ongoing trade tensions between the two countries.
New Zealand Data and Caution Ahead of Inflation Figures
On the economic front, New Zealand’s Visitor Arrivals fell by 8.4% year-on-year to 311,800 in March 2025, marking the second consecutive monthly decline. Additionally, Electronic Card spending in New Zealand remained flat at NZD 6.46 billion in April, on a seasonally adjusted basis.
Traders are exercising caution ahead of New Zealand’s upcoming food inflation data for April, following a 14-month high recorded in March. The release of this data is expected to provide further insight into inflationary pressures in the region.
As market participants await the release of the US Producer Price Index (PPI) and the University of Michigan’s Consumer Sentiment Survey later this week, the NZD/USD pair is likely to remain influenced by global sentiment, trade developments, and economic data releases.
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