NZD/USD is higher than 0.5550 on the increasing hope of escalation in global trade tensions
- NZD/USD is placed with Trump’s comments on fuel in reducing commercial tensions.
- NZD can face pressure with the entry of new American customs duties into effect, including a 104 % large duty on Chinese imports.
- The CME Fedwatch indicates that the markets are fully priced in reducing the Federal Reserve rate of 25 degrees early in May.
The NZD/USD husband settles near 0.5560 during the European session on Wednesday after three consecutive days of losses. The recovery was supported by US President Donald Trump’s comments, which expressed his openness to commercial negotiations, which leads to optimism to cancel the potential escalation in global trade tensions.
However, the upward trend may be limited as the New Zealand dollar (NZD) remains under pressure amid the growing market fluctuation. The new American customs duties, including a large duty of 104 % on Chinese imports, entered a close trading partner in New Zealand, on Wednesday. Although the White House has indicated a willingness to engage in talks, the strong response of China – which leaks to “fighting to the end” – may continue to continue the commercial conflict.
Meanwhile, New Zealand Reserve (RBNZ) reduced the standard interest rate by 25 basis points (BPS), align with expectations. This step reflects the increasing concerns about weak inflation, slowing economic growth, and the early signs of the smoothness of the labor market. Speaking of speculation that long commercial tensions can push RBNZ to reduce 50 basis points, as markets decline in the possibility of up to 100 basis points in additional reduction by 2025.
In the United States (the United States), the President of the Federal Reserve at Chicago Austan Fuolsby reiterated the central bank’s commitment to the data -based policy approach. According to the CME Fedwatch tool, the markets are increasingly priced at a rate of 25 bits per second by the Federal Reserve (Fed) as soon as possible, although July is still the main issue. By the end of the year, traders expect more than 100 basis points in cumulative discounts.
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.
