• NZD/USD advances as the US Dollar weakens ahead of the US employment report.
• Fed rate cut expectations and concerns about its independence weigh on the Greenback.
• Improved market risk sentiment supports the New Zealand Dollar despite mixed Chinese data.

NZD/USD trades around 0.6060 on Wednesday at the time of writing, up 0.25% on the day, and posts a nearly two-week high amid persistent US Dollar (USD) weakness. The bullish move comes as investors position cautiously ahead of the release of the US Nonfarm Payrolls (NFP) report.

The US Dollar remains under pressure as markets strengthen their expectations of monetary easing by the Federal Reserve (Fed) this year. Growing concerns about the central bank’s independence also undermine the Greenback, keeping the US Dollar Index (DXY) near weekly lows. In this context, any confirmation of a slowdown in the US labor market could reinforce bets on further rate cuts and extend the USD’s corrective phase.

The NFP report, due later in the day, is expected to show that 70,000 jobs were added in January, while the Unemployment Rate is expected to remain unchanged at 4.4%. A weaker-than-expected reading would support the narrative of moderating US economic momentum and could weigh further on the US Dollar in the near term.

At the same time, the improvement in overall market risk sentiment supports so-called cyclical currencies, including the New Zealand Dollar (NZD). This dynamic partly offsets disappointing inflation figures from China. China’s Consumer Price Index (CPI) rose 0.2% YoY in January, down from 0.8% previously, signaling still-fragile domestic demand. The Producer Price Index (PPI) remained in negative territory for a 40th consecutive month, falling 1.4% on an annual basis, reinforcing concerns about persistent deflationary pressures in the world’s second-largest economy.

However, these data also strengthen expectations of additional fiscal and monetary stimulus from China, a factor that is generally supportive for Asia-Pacific currencies, including the Kiwi.

In New Zealand, the rise in the Unemployment Rate to 5.4% in the fourth quarter of 2025, its highest level since 2015, limits the pair’s upside potential. This deterioration in the labor market reduces the likelihood of monetary tightening by the Reserve Bank of New Zealand (RBNZ). Money markets are now pricing in more than a 60% chance of a rate cut at the May meeting.

In the short term, NZD/USD price action will largely depend on the market reaction to the US employment data and on comments expected from several Federal Reserve officials.