The NZD/USD currency pair edged higher, reaching near 0.5770 during early Asian trading on Friday, amid a strengthening US Dollar (USD) driven by unexpectedly robust US Producer Price Index (PPI) data. Market attention remains fixed on the US Federal Reserve’s interest rate decision, scheduled for next week.
In New Zealand, the Business NZ Performance of Manufacturing Index (PMI) declined slightly to 45.5 in November from 45.8 in October. This marks another month of contraction in the manufacturing sector, highlighting continued economic pressure.
Adding to the downward pressure on the New Zealand Dollar (NZD) are revived concerns over tariff threats from the US. Speculation surrounding a potential 10% tariff on Chinese goods has supported the USD while weighing on the NZD, as China remains New Zealand’s largest trading partner.
On the US front, expectations for the Federal Reserve’s December 17-18 policy meeting point toward a likely 25 basis-point interest rate cut, according to CME Group’s FedWatch Tool. Meanwhile, the US Labor Department reported a stronger-than-anticipated 0.4% month-over-month rise in PPI for November, the highest increase since June. This follows an upwardly revised 0.3% gain in October and exceeded market forecasts of 0.2%, fueling USD momentum.
The interplay of these economic and geopolitical factors continues to influence the trajectory of the NZD/USD pair.
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