NZD/USD price strengthens as China GDP exceeds forecasts
NZD/USD gains momentum after upbeat China GDP
The NZD/USD pair strengthened during Friday’s Asian session, trading near 0.5610, buoyed by robust economic data from China. China's Gross Domestic Product (GDP) for Q4 2024 grew by 5.4% year-over-year, exceeding market expectations of 5%.
Quarterly growth also reached 1.6%, in line with forecasts and an improvement from the 0.9% recorded in Q3. Additionally, China’s retail sales rose by 3.7% YoY in December, surpassing the previous figure of 3.0%, while industrial production surged to 6.2% from 5.4%.
The stronger-than-expected data reflects the effectiveness of China’s stimulus measures, providing a supportive backdrop for the New Zealand dollar (NZD), which is often seen as a proxy for the Chinese economy due to strong trade links.
NZD/USD price dynamics (Dec 2024 - Jan 2025) Source: TradingView.
Dovish Fed remarks weigh on the U.S. Dollar
The NZD also found support from comments by Federal Reserve Governor Christopher Waller, who suggested the possibility of multiple interest rate cuts in 2025 if inflation continues to ease. Waller’s dovish tone fueled market expectations for rate reductions, with CME Group data showing a 50% probability of a rate cut by May.
This outlook has pressured the U.S. dollar, allowing the Kiwi to gain traction as traders position for a softer U.S. monetary policy in response to easing inflation concerns.
Outlook and market focus
The near-term direction of NZD/USD will depend on upcoming U.S. economic data, including Building Permits, Housing Starts, and Industrial Production figures for December, set to be released later on Friday. Traders will also closely watch whether China’s economic rebound maintains its momentum, further supporting the NZD.
Previously, NZD/USD faced resistance at 0.5650, the 0.618% Fibonacci retracement level, influenced by rate cut expectations from the Reserve Bank of New Zealand. While the pair held above 0.5600, RSI indicators signaled weakening momentum, underscoring the importance of reclaiming the 0.5650 level to sustain further upward movement.
