- NZD/USD gains traction to about 0.5740 in the early Asian session on Thursday.
- Trump’s unpredictable ads about customs tariffs undermine the US dollar.
- China’s shrinkage pressure may reduce the bullish trend of Chinese kiwi.
NZD/USD pair extends nearly 0.5740 during the early Asian session on Thursday, supported by the weakest US dollar (USD). The US producers’ price index (PPI) will be the most prominent later on Thursday, followed by weekly initial unemployment claims.
Fears about US President Donald Trump’s policies have unpredictable have published uncertainty among investors, which weighs green. Investors are concerned about the weakest economic data, as well as the major discounts of government workforce and government spending. Goldman Sachs increased last week the chance of recession from 15 % to 20 %, noting that it had seen policy changes as the main risks of the economy.
On the other hand, concerns about continuous shrinkage pressure in China, the largest export market in New Zealand, undermines Kiwi. The consumer price index (CPI) was lost in February, and it decreased at a sharp pace in 13 months, while producers continued to shrink.
“The Chinese economy is still facing intuitive pressure,” said Zeoye Zhang, president and chief economist at Pinpoint Asset Management.
Common questions about the New Zealand dollar
The New Zealand dollar (NZD), also known as Kiwi, is a well -known trading currency among investors. Its value is widely determined by the health of the New Zealand economy and the country’s central bank policy. However, there are some unique characteristics that can make NZD move. The performance of the Chinese economy tends to move kiwi because China is the largest commercial partner in New Zealand. The bad news of the Chinese economy is likely to mean exports less than New Zealand to the country, and thus strike the economy. Another factor moves NZD is dairy prices because the dairy industry is the main export of New Zealand. High dairy prices enhance export income, and contribute positively to the economy and thus to NZD.
The Reserve Bank in New Zealand (RBNZ) aims to achieve and maintain the rate of inflation between 1 % and 3 % in the medium term, focusing on keeping it near the mid -2 % point. To this end, the bank determines an appropriate level of interest rates. When inflation is very high, RBNZ will increase interest rates to cool the economy, but this step will make bond returns higher, which increases investor calls to invest in the country and thus enhance NZD. On the contrary, low interest rates tend to weaken NZD. A comparison of the so -called virtuous rate, or how to compare rates in New Zealand can compare it to the one set by the American Federal Reserve, a major role in transferring the NZD/USD pair.
New Zealand’s macroeconomic data versions are the key to assessing the state of the economy and can affect the evaluation of the New Zealand dollar (NZD). The strong economy, based on high economic growth, is a decrease in unemployment and high confidence is good for NZD. Higher economic growth attracts foreign investment and may encourage the New Zealand Reserve to increase interest rates, if this economic power corresponds to high inflation. On the contrary, if economic data is weak, NZD is likely to decrease.
The New Zealand dollar (NZD) tends to strengthen during risk periods, or when investors see the wider market risk that is low and optimistic about growth. This tends to lead to a more convenient look of goods and so -called “commodity currencies” like Kiwi. On the contrary, NZD tends to be weak in times of turmoil in the market or economic uncertainty where investors tend to sell high -risk assets and flee to the most resigned safe havens.
