Forex News
- NZD/USD gathers strength to near 0.5785 in Monday’s Asian session.
- China’s Trade Surplus widened to 111.68B in November, largest in five months.
- Traders priced in nearly a 90% chance of a Fed cut on Wednesday.
The NZD/USD pair attracts some buyers to around 0.5785 during the Asian trading hours on Monday. The New Zealand Dollar (NZD) remains weak against the US Dollar (USD) after China’s Trade Balance data. All eyes will be on the US Federal Reserve (Fed) interest rate decision on Wednesday.
Data released by the National Bureau of Statistics of China on Monday showed that China’s Trade Surplus came in at 111.68B, compared to 90.07B in October, widening more than the 100.2B expected. The trade surplus registered the largest since June as Exports surged more than Imports.
Meanwhile, Exports climbed by 5.7% in November versus 1.1% prior. Imports rose by 1.9%, compared to 1.0% previously. A substantial China's Trade Surplus can be viewed as a sign of national economic strength and lifts the China-proxy Kiwi, as China is a major trading partner for New Zealand.
The Fed will hold its final meeting of the year, and markets expect the US central bank to cut interest rates on Wednesday for a third consecutive meeting. This, in turn, could undermine the Greenback and create a tailwind for the pair. Traders are currently priced in nearly a 90% probability for a 25 basis points (bps) reduction to the 3.50% to 3.75% target range at the upcoming meeting on Wednesday, according to the CME FedWatch tool.
Fed Chair Jerome Powell will hold a press conference after the meeting. His remarks could provide some insights into the US interest rate path. If Powell delivers a "hawkish cut," this could provide some support to the USD in the near term.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- The Japanese Yen attracts fresh buyers as Japan’s wage growth data reaffirms BoJ rate hike bets.
- The intraday uptick seems rather unaffected by the downward revision of Japan’s Q3 GDP print.
- Dovish Fed expectations undermine the USD and weigh on USD/JPY ahead of central bank events.
The Japanese Yen (JPY) attracts some dip-buying at the start of a new week and remains close to its highest level since November 14, touched against a weaker US Dollar (USD) on Friday. Japan's wage growth data reaffirmed market bets for an imminent rate hike by the Bank of Japan (BoJ) in December, which helps offset the dismal Q3 GDP print and provides a modest lift to the JPY. Apart from this, the cautious market mood is seen as another factor that benefits the JPY's relative safe-haven status.
Meanwhile, hawkish BoJ expectations keep the Japanese government bond (JGB) yields close to a multi-year peak. The resultant narrowing of the rate differential between Japan and other major economies further benefits the lower-yielding JPY. The USD, on the other hand, languishes near its lowest level since late October amid bets that the Federal Reserve (Fed) will cut rates again this week, and turns out to be another factor exerting pressure on the USD/JPY pair during the Asian session.
Japanese Yen benefits from firming expectations for an imminent BoJ rate hike in December
- Government data showed earlier this Monday that Japan’s Nominal Wages rose 2.6% YoY in October, surpassing expectations of 2.2% and marking the strongest increase in three months. However, inflation-adjusted real wages shrank for the 10th consecutive month, by 0.7% from a year earlier, amid the 3.4% rise in consumer prices.
- This adds pressure on the Bank of Japan amid speculation that policymakers may opt for another rate hike at its December policy meeting and provides a modest lift to the Japanese Yen during the Asian session. The uptick seems unaffected by the revised Q3 GDP, showing Japan's economy contracted faster than initially reported.
- The revised Gross Domestic Product report from the Cabinet Office revealed that Japan's economy shrank 0.6% in the July-September period compared with the initial estimate of 0.4%. On a yearly basis, the economy contracted by 2.3%, or its fastest pace since Q3 2023, vs the forecast for a 2.0% fall and 1.8% fall reported originally.
- Investors, however, seem convinced that higher wages will increase household purchasing power and boost spending, which should fuel demand-driven inflation and bolster the economy. Furthermore, BoJ Governor Kazuo Ueda said last week that the likelihood of the economic and price projections being met is rising.
- This, along with Prime Minister Sanae Takaichi's reflationary push and massive spending plan, lifted the benchmark 10-year Japanese government bond (JGB) yield to its strongest level since 2007 last Thursday. Moreover, 20-year and 30-year JGB yields reached levels not seen since 1999, further underpinning the JPY.
- In contrast, the CME Group's FedWatch Tool indicates that traders are currently pricing in a nearly 90% chance that the US Federal Reserve (Fed) will lower borrowing costs again on Wednesday. This, in turn, keeps the US Dollar depressed near its lowest level since late October and exerts pressure on the USD/JPY pair.
- The USD bears, however, might refrain from placing aggressive bets and opt to wait for more cues about the Fed's rate-cut path. Hence, the focus will remain glued to the updated economic projections, including the so-called dot plot, and Fed Chair Jerome Powell's comments during the post-meeting press conference.
USD/JPY could find support near Friday’s swing low, around 154.35, ahead of the 154.00 mark
The USD/JPY pair continued with its struggle to move back above the 100-hour Simple Moving Average (SMA) on Friday, and the subsequent slide favors bearish traders. Furthermore, technical indicators on hourly charts are holding in negative territory and back the case for additional losses, though neutral oscillators on the daily chart warrant some caution. Hence, any further intraday slide could find some support near Friday's swing low, around the 154.35 region, below which spot prices could fall to the 154.00 round figure.
On the flip side, any meaningful recovery attempt is likely to confront a stiff barrier near the 155.35 region, or the 100-hour SMA. Some follow-through buying beyond Friday's swing high, around mid-155.00s, might trigger a short-covering move and allow the USD/JPY pair to reclaim the 156.00 mark. The momentum could extend further towards the next relevant hurdle near the 156.60-156.65 region en route to the 157.00 round figure.
Economic Indicator
Labor Cash Earnings (YoY)
This indicator, released by the Ministry of Health, Labor and Welfare, shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn't take into account earnings from holding financial assets nor capital gains. Higher income puts upward pressures on consumption, and is inflationary for the Japanese economy. Generally, a higher-than-expected reading is bullish for the Japanese Yen (JPY), while a below-the-market consensus result is bearish.
Read more.Last release: Sun Dec 07, 2025 23:30
Frequency: Monthly
Actual: 2.6%
Consensus: 2.2%
Previous: 1.9%
Source: Ministry of Economy, Trade and Industry of Japan
- The USD/CAD pair clings to Friday’s losses near 1.3800, driven by strong Canadian employment data.
- Investors expect the BoC to hold interest rates steady and the Fed to cut them on Wednesday.
- US President Trump refrained from providing a timeframe about when the White House will resume trade talks with Canada.
The USD/CAD pair trades weakly near its 11-week low around 1.3800 during the Asian trading session on Monday. The Loonie pair fell drastically on Friday after the release of the Canadian labor market report for November, which showed that the Unemployment Rate dropped significantly to 6.5% from 6.9% in October due to a significant increase in part-time workers.
Full-time jobs created by the Canadian economy in November were 53.6K, slightly lower than 66.6K in October, while economists anticipated that employers would have shed 5K jobs.
Strong Canadian employment data has diminished hopes of an interest rate cut by the Bank of Canada (BoC) for the monetary policy scheduled on Wednesday. The BoC is expected to hold interest rates steady at 2.25%.
However, the uncertainty over trade relations between the United States (US) and Canada still remains a major hang for the Canadian Dollar. Following the meeting Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum on Friday, US President Donald Trump stated that talks were "very good, very productive", but didn’t clarify on when Washington will resume trade talks with Canada.
US President Trump said, “We’ll see,” when asked if he would restart trade talks with his northern neighbour, cbc.ca reported.
Meanwhile, the US Dollar (USD) trades with caution ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 3.50%-3.75% as labor market conditions continue to deteriorate.
Economic Indicator
BoC Interest Rate Decision
The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.
Read more.Next release: Wed Dec 10, 2025 14:45
Frequency: Irregular
Consensus: 2.25%
Previous: 2.25%
Source: Bank of Canada
China's Trade Balance for November, in Chinese Yuan (CNY) terms, arrived at CNY792.57 billion, widening from the previous figure of CNY640.40 billion.
Exports climbed 5.7% YoY in November vs. -0.8% in October. The country’s imports rose 1.7% YoY in the same period vs. 1.4% recorded previously.
In US Dollar (USD) terms, China’s Trade Surplus expands more than expected in November.
Trade Balance arrived at +111.68B versus +100.2B expected and +90.07B prior.
Exports (YoY): 5.7% vs. 3.8% expected and 1.1% last.
Imports (YoY): 1.9% vs. 2.8% expected and 1.0% previous.
Market reaction to China’s Trade Balance
AUD/USD extends gains around 0.6647 in an immediate reaction to the Chinese trade data. The pair is up 0.12% on the day, as of writing.
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.10% | -0.17% | -0.08% | -0.14% | -0.31% | -0.08% | |
| EUR | 0.08% | 0.03% | -0.05% | 0.05% | -0.01% | -0.19% | 0.04% | |
| GBP | 0.10% | -0.03% | -0.04% | 0.03% | -0.03% | -0.21% | 0.03% | |
| JPY | 0.17% | 0.05% | 0.04% | 0.11% | 0.05% | -0.12% | 0.12% | |
| CAD | 0.08% | -0.05% | -0.03% | -0.11% | -0.06% | -0.24% | -0.00% | |
| AUD | 0.14% | 0.00% | 0.03% | -0.05% | 0.06% | -0.18% | 0.06% | |
| NZD | 0.31% | 0.19% | 0.21% | 0.12% | 0.24% | 0.18% | 0.24% | |
| CHF | 0.08% | -0.04% | -0.03% | -0.12% | 0.00% | -0.06% | -0.24% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section was published on Monday at 1:00 GMT as a preview of China's Trade Balance data.
China’s Trade Balance Overview
The General Administration of Customs will publish its data for November on Monday at 03.00 GMT. Trade balance is expected to widen to $100.20B in November, compared to $90.07 in the previous reading. Exports are expected to rise by 3.8%, while Imports are projected to climb by 2.8%.
As the Chinese economy has influence on the global economy, this economic indicator would have an impact on the Forex market.
How could the China’s Trade Balance affect AUD/USD?
AUD/USD trades on a negative note on the day in the lead up to the China’s Trade Balance data. The pair edges lower as markets turn cautious ahead of the Reserve Bank of Australia (RBA) and US Federal Reserve (Fed) interest rate decisions later this week.
If data comes in better than expected, it could lift the Australian Dollar (AUD), with the first upside barrier seen at the December 5 high of 0.6650. The next resistance level emerges at the September 16 high of 0.6688, en route to the September 17 high of 0.6707.
To the downside, the December 4 low of 0.6598 will offer some comfort to buyers. Extended losses could see a drop to the December 1 low of 0.6532, followed by the 100-day EMA of 0.6520.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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