• The New Zealand Dollar stalls below 0.5800 despite three consecutive days of gains.
• Investors brace for a “hawkish cut” from the Federal Reserve on Wednesday.
• Strong Chinese trade data continues to support the New Zealand Dollar.

NZD/USD trades around 0.5780 on Tuesday at the time of writing, virtually unchanged on the day. The New Zealand Dollar (NZD) is attempting to extend its rebound, but the US Dollar (USD) has regained a touch of support, limiting the pair’s upward momentum.

The market’s brief risk-off reaction to the 7.5-magnitude earthquake in northern Japan boosted US Treasury yields and, in turn, the US Dollar. Meanwhile, caution dominates ahead of Wednesday’s Federal Reserve (Fed) monetary policy decision, where markets widely expect a 25-basis-point rate cut paired with a firm message. Investors anticipate that Fed Chair Jerome Powell will raise the threshold for further easing and hint at a pause in early 2026.

At the same time, the New Zealand Dollar continues to benefit from Monday’s Chinese trade figures. China, New Zealand’s largest trading partner, reported a higher-than-expected trade surplus in November, supported by a 5.9% YoY increase in exports. The data improves the economic outlook for Wellington while strengthening demand for the Kiwi.

In the United States (US), the US Dollar remains generally subdued despite Monday’s rebound. The US Dollar Index (DXY) still trades near six-week lows, as market participants await the tone of the Fed’s communication, potential changes to the dot plot, and Chair Jerome Powell’s comments to assess the pace of the coming easing cycle.

Today’s US labour data offered mixed signals. Automatic Data Processing (ADP) reported average private-sector job creation of 4,750 per week over the four weeks ending November 15. Meanwhile, the Job Openings and Labor Turnover Survey (JOLTS) showed vacancies rising slightly to 7.67 million in October, with hiring and separations broadly unchanged.

These figures come on the heels of a recent series of labour indicators pointing to a gradual slowdown in the US job market. They are not strong enough to reassure investors about underlying economic momentum and reinforce the view that the Fed may adopt a firm tone on Wednesday to temper expectations of aggressive easing.

Internal divisions within the Federal Open Market Committee (FOMC) and speculation that Powell could be replaced in May by a more dovish Chair continue to fuel expectations of additional rate cuts in 2026.