Key Moments
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NZD/USD rose for a second straight session, trading near 0.5780 during
Asian hours on Tuesday. -
Meanwhile, New Zealand business confidence jumped to 48% in Q4 2025 from
18% in Q3, marking the highest level since March 2014, according to NZIER. -
However, gains in NZD/USD faced resistance as the US Dollar firmed ahead
of key December CPI data and a closely watched Fed outlook.
NZD/USD Supported by Strong New Zealand Business Sentiment
NZD/USD extended its rebound for a second session on Tuesday. The pair traded
near 0.5780 during Asian hours. The New Zealand Dollar found support from a
sharp improvement in domestic business sentiment. As a result, prices moved
closer to the 0.5800 level.
#NZDUSD 1H
NZD/USD is trading around key support and pivot areas that have historically acted as bounce points.
Buying nearer support gives a better risk‑reward than chasing highs.
Resistance breakouts toward 0.5800+ could trigger continuation to higher targets if momentum… pic.twitter.com/HRVWB91vdX— 𝐇𝐀𝐃𝐃𝐘 𝐅𝐗 (@Nova_Fx000) January 12, 2026
According to the New Zealand Institute of Economic Research (NZIER), business
confidence rose to 48% quarter-over-quarter in Q4 2025. This marked a sharp
increase from 18% in Q3. Notably, it was the strongest reading since
March 2014.
NZIER principal economist Christina Leung said lower interest rates are
starting to support the economy. She added that the recovery is gaining
traction across sectors and regions, Reuters reported.
Key New Zealand Confidence Metrics
| Indicator | Q3 2025 | Q4 2025 | Comment |
|---|---|---|---|
| Business Confidence (NZIER, QoQ) | 18% | 48% | Highest level since March 2014 |
US Dollar Strength and CPI Data Cap Upside
Despite the positive backdrop in New Zealand, NZD/USD upside remained limited.
The US Dollar edged higher ahead of the December Consumer Price Index (CPI)
release later in the day. Meanwhile, traders positioned for signals on the
Federal Reserve’s policy path.
Markets currently price in two Fed rate cuts this year, starting in June.
However, a stronger inflation print could delay easing expectations. At the
same time, weaker-than-expected December Nonfarm Payrolls supported a more
dovish outlook.
According to the CME Group’s FedWatch Tool, futures imply a 95% chance that
the Fed will keep rates unchanged at its January 27–28 meeting.
Policy Uncertainty Weighs on Market Confidence
Traders remained cautious amid rising concerns over the Federal Reserve’s
independence. Federal prosecutors threatened to indict Fed Chair Jerome Powell
over his congressional testimony related to a building renovation.
In addition, investors monitored a US Supreme Court ruling on President
Donald Trump’s tariff policies, expected on Wednesday. The decision could
influence broader risk sentiment and currency markets.
Background: Key Drivers of the New Zealand Dollar
The New Zealand Dollar, often called the Kiwi, is a widely traded currency.
Its value depends largely on economic conditions and monetary policy.
However, several external factors also play an important role.
China and Dairy Influence on the Kiwi
China is New Zealand’s largest trading partner. As a result, changes in the
Chinese economy often affect the Kiwi. Weak demand from China can hurt exports
and weigh on the currency.
Dairy prices are another key driver. Dairy is New Zealand’s largest export.
Higher prices support export income and economic growth, which can lift NZD.
How RBNZ Policy Impacts NZD
The Reserve Bank of New Zealand (RBNZ) targets inflation between 1% and 3%.
It aims to keep inflation close to the 2% midpoint over time. To do so, the
RBNZ adjusts interest rates.
When inflation rises too quickly, the RBNZ often raises rates to cool demand.
Higher rates attract foreign capital and support the Kiwi. In contrast, rate
cuts usually pressure the currency.
Importantly, the interest rate gap between New Zealand and the United States
strongly influences NZD/USD. This gap affects the appeal of holding Kiwi
assets versus US Dollar assets.
Economic Data and Risk Sentiment as Catalysts
Traders closely watch New Zealand economic data, including growth, jobs, and
confidence figures. Strong data can attract investment and may lead to tighter
policy, which supports NZD. Weak data, however, often weighs on the currency.
Broader risk sentiment also matters. The Kiwi tends to rise in risk-on
markets, when investors seek higher-yielding assets. During periods of
uncertainty, investors often shift to safe havens, which can pressure NZD.
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