- NZD/USD close to 0.5980 in Wednesday’s Asian season.
- The US Treasury Secretary said that the trade war with China is not sustainable.
- RBNZ dovish can captivate the opposite of bets NZD.
The NZD/USD pair collects power up to about 0.5980 during the Asian trading hours on Wednesday. New Zealand Dollar (NZD) US Treasury Secretary Scott Besant has increased to its highest level since the beginning of November 2024 against the US Dollar (USD) after optimistic remarks. The traders will indicate more than the flash US S&P Global Manufacturing and Services PMI for April, which will be published later on Wednesday.
Besant said on Tuesday that the performance of the tariff against China is unstable, and he expects “de-size” in the trade war between the world’s two largest economies in the near future. The spontaneity of US-China trading tension provides some support to fuel optimism and China-evil kiwi as China is New Zealand’s largest trading partner.
The US Treasury Secretary also warned that the conversation between the US and China had not yet started formally. Trump implemented 145% on China, which has counted a 125% tariff on American goods. Concerns over US economic growth and high inflation pressure can weaken USD and create a tailwind for NZD/USD.
On the other hand, money markets have given a complete price at the rate of deduction from Reserve Bank of New Zealand (RBNZ) at the May meeting despite an increase in inflation. RBNZ cut a quarterly-point rate earlier this month, reducing its official cash rate (OCR) by 3.5%, the lowest level since October 2022. New Zealand’s central bank is expected to continue rates to remain aggressive and promote New Zealand’s economy. This, in turn, may be reversed for NZD in the near period.
New Zealand Dollar FAQ
New Zealand Dollar (NZD), also known as Kiwi, is a famous business currency among investors. Its value is broadly determined by the health of New Zealand’s economy and the central bank policy of the country. Nevertheless, there are some unique specialties that can also carry forward NZD. The performance of the Chinese economy moves Kiwi as China is New Zealand’s largest trading partner. Bad news for the possibility of Chinese economy means that New Zealand exports to the country, kills the economy and thus its currency. Another factor that pursues NZD is dairy prices as the dairy industry is the main export of New Zealand. High dairy prices promote export income, contribute to the economy positively and thus in NZD.
The Reserve Bank of New Zealand (RBNZ) aims to obtain and maintain inflation rate between 1% and 3% in the medium period, focusing on keeping it near 2% middle-point. To end this, the bank determines a reasonable level of interest rates. When inflation is very high, the RBNZ will increase the interest rates to cool the economy, but the move will also increase the yield of bonds, which will increase the appeal of investors to invest in the country and thus boost the NZD. Conversely, low interest rate weakens NZD. The difference of so -called rate, or in New Zealand, can also play an important role in transferring the NZD/USD pair as compared to the people determined by the US Federal Reserve as compared to the rates in New Zealand.
Macroeconomic data release in New Zealand is important for assessing the status of the economy and can affect New Zealand dollar (NZ) evaluation. A strong economy is good for NZD based on high economic growth, low unemployment and high confidence. High economic growth attracts foreign investment and can encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes with high inflation. Conversely, if the economic data is weak, the NZD is likely to depreciate.
New Zealand Dollar (NZD) is stronger during the risk-trans-period, or when investors feel that comprehensive market risks are low and is optimistic about development. It leads to a more favorable approach to objects and so -called ‘commodity currencies’ such as kiwi. In contrast, NZD becomes weak in the time of market disturbance or economic uncertainty as investors sell high-risk property and run away for more safe havens.
