The New Zealand dollar recovered after hitting a seven-month low of 0.5605 in the previous session, trading near 0.5630 during Asian hours on Monday. The lift came largely on the back of stronger-than-expected data out of China—New Zealand’s biggest trading partner. China’s Consumer Price Index rose 0.2% year-on-year in October, rebounding from a 0.3% decline in September and beating forecasts for flat inflation. On a monthly basis, CPI also gained 0.2% in October versus 0.1% in September. Meanwhile, Producer Price Index inflation eased by 2.1% year-on-year, an improvement from a 2.3% drop in September and slightly above the market consensus of –2.2%.
Further support for the NZD came from an announcement by China’s Ministry of Commerce that it will temporarily lift its ban on approving exports of certain “dual-use” materials—gallium, germanium, antimony, and super-hard substances—to the United States. The suspension is effective immediately and will run until November 27, 2026.
Nevertheless, gains in NZD/USD may be capped by a firmer U.S. dollar if a U.S. government shutdown is averted. According to Bloomberg, a group of centrist Senate Democrats has agreed to back a funding deal that would reopen the government, provide back pay to furloughed workers, and resume delayed federal transfers. Under the proposal, some departments would be funded through January 30, while others would receive full-year allocations.
