Ella 
In early Asian trading on Friday, the New Zealand dollar/US dollar continued its decline to around 0.5615. The New Zealand dollar weakened amid worries about weak consumer demand and a protracted recession in China’s real estate market. Market trading is likely to be quiet ahead of the New Year holiday.
Data released on Friday showed that China’s industrial profits fell for the fourth consecutive month, with the annual profit rate of China’s industrial enterprises above designated size in November – a single month record of -7.3%. As China is New Zealand’s largest trading partner, continued weak domestic demand in China could weigh on China’s proxy currency, the New Zealand dollar.
In addition, speculation that the Donald Trump administration may impose 10% tariffs on Chinese goods also contributed to the New Zealand dollar’s decline. Many analysts expect Trump’s tariffs could stoke inflation and could convince the Federal Reserve to slow or pause interest rate decisions next year to take a wait-and-see approach. This could therefore boost the US dollar and weigh on NZD/USD.
After New Zealand’s economy fell into recession in the third quarter, the market expected the Reserve Bank of New Zealand (RBNZ) to further cut interest rates to stimulate economic growth. Markets have priced in a nearly 70% chance of a 50 basis point rate cut by the Reserve Bank of New Zealand in February, with rates expected to drop to 3.0% by the end of 2025.
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