The New Zealand Dollar (NZD) maintained modest gains against the US Dollar (USD), trading near 0.6020 during Monday’s Asian session following the release of mixed economic data from China, New Zealand’s key trading partner.
China’s National Bureau of Statistics (NBS) reported that Retail Sales grew 6.4% year-over-year in May, beating expectations of 5.0% and improving on April’s 5.1%. Conversely, Industrial Production rose 5.8% YoY, slightly missing the 5.9% forecast and down from 6.1% in the previous month.
At a Monday press briefing, the NBS acknowledged that China’s domestic economy is expected to remain generally stable through the first half of 2025. However, uncertainties—particularly around trade policies—pose challenges to sustaining steady growth beyond the second quarter.
Closer to home, New Zealand’s Business NZ Performance of Services Index (PSI) fell to 44.0 in May from 48.1 in April, marking the lowest reading since June 2024 and signaling the fourth straight month of contraction in the services sector.
Despite these mixed fundamentals, NZD/USD’s upside remains constrained amid rising risk aversion fueled by escalating geopolitical tensions in the Middle East. The ongoing conflict between Israel and Iran persists despite global calls for de-escalation, with Iran launching multiple ballistic missile waves targeting Israeli military and fuel infrastructure. The Iranian Revolutionary Guard claimed successful strikes on key Israeli sites.
Diplomatic efforts to mediate the conflict appear stalled, as Iran has informed Qatar and Oman that it refuses to negotiate while under attack. Reports that Tehran sought US-brokered ceasefire talks through these mediators were denied by an official source.
As geopolitical risks continue to weigh on global markets, the NZD/USD pair may struggle to build on recent gains despite the resilience shown by China’s retail sector.
