New Zealand Dollar strengthens above 0.5650 on strong China’s GDP data

• NZD/USD gathers strength to around 0.5655 in Monday’s Asian session.
• China’s Q3 GDP beats forecast, rising by 4.5% YoY.
• Fed’s Warsh gives no hint about the next rate hike.

The NZD/USD pair holds positive ground near 0.5655 during the Asian trading hours on Monday. The New Zealand Dollar (NZD) edges slightly higher against the US Dollar (USD) following the upbeat Chinese economic data. Traders await New Zealand’s Consumer Price Index (CPI) inflation report, which is due later on Thursday.

Data released by the National Bureau of Statistics of China on Monday showed that China’s Gross Domestic Product (GDP) expanded by 4.5% year-over-year (YoY) in the third quarter (Q3), versus 4.3% prior. This figure came in stronger than market expectations of 4.4% growth.

On a quarterly basis, the Chinese economy grew by 1.2% in Q3, compared to a rise of 0.9% in Q2, above the market consensus of an 1.1% increase.

Meanwhile, China’s Retail Sales rose 1.1 % YoY in September, versus a rise of 0.5% expected and 0.4% growth in August. Industrial Production climbed 5.5% YoY in September, compared to the 5.4% forecast and 5.2% reported in August.

The stronger-than-expected Chinese economic data provide some support to the China-proxy Kiwi, as China is a major trading partner of New Zealand.

Federal Reserve (Fed) Chairman Kevin Warsh gives no hint on October policy decision during the International Monetary Fund (IMF) event on Friday. This, in turn, could drag the Greenback lower in the near term. Warsh said that he does ‌not “prejudge” interest-rate decisions, giving no preview of whether the central bank will hike or hold short-term rates steady at its upcoming policy meeting.

RBNZ dilemma sharpens as markets price in rate hike

Commerzbank’s Volkmar Baur argues that the RBNZ “faces a difficult decision” at its next policy meeting in around two weeks, with markets now assigning “a probability of roughly 80% to a rate hike” in response to the renewed rise in inflation. However, he cautions that “the weakness of economic activity and the continued absence of visible second-round inflation effects make me somewhat more cautious,” suggesting the case for tightening is far from clear-cut. Against this backdrop, Baur expects that “next week’s full CPI release will attract even more attention than usual” as investors reassess the balance of risks for policy.

Warsh flags investment surge and AI demand risks but avoids policy pre-commitment

Fed Chair Warsh delivered a moderately constructive but cautious message, with the 5.6/10 FXS Speechtracker score coming in slightly softer compared to the established baseline of 6.1/10. The admission of being “over-scarred” by the Global Financial Crisis underscores a persistent risk-averse bias even as Warsh highlights structural growth and an investment surge as key upside drivers. Warsh’s refusal to pre-judge the October and December meetings, while stressing price stability and spillover channels, keeps near-term Dollar rate expectations data-dependent rather than pre-committed.

The FXS Fed Sentiment Index was unchanged on the speech, moving 0.00 points to hold at a still-elevated 127.51, signaling that the overall policy tone remains firmly in hawkish territory despite the slightly softer FXS Speechtracker score. For FX markets, the combination of a high FXS Fed Sentiment Index level and Warsh’s emphasis on upside investment dynamics and AI-related demand risks should keep Dollar bulls broadly supported, even without fresh guidance on the precise path of rate decisions.

Technical Analysis: Negative outlook of NZD/USD prevails below the 100-day SMA

In the daily chart, NZD/USD retains a bearish near-term bias as spot remains below the 100-day simple moving average (SMA) and under the upper Bollinger Band. Price is holding slightly above the 20-day Bollinger SMA, suggesting some tentative stabilization within the lower half of the recent volatility envelope, while the 14-day Relative Strength Index (RSI) at 46.9 hovers just below the neutral 50 line, hinting at soft but not oversold downside pressure.

On the topside, initial resistance is located at the upper Bollinger Band around 0.5700, with a stronger cap emerging at the 100-day SMA at 0.5780, which reinforces the broader bearish structure unless decisively reclaimed. On the downside, immediate support is provided by the Bollinger middle band at 0.5635, followed by a more substantial floor at the lower Bollinger Band near 0.5565, where a break would open the way for a continuation of the downtrend.

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