- The NZD/USD falls as the US dollar gains strength, after China’s decision to exempt certain US imports from its 125%tariffs.
- The US Secretary of Agriculture, Brooke Rollins, said the Trump administration is maintaining daily discussions with China on tariff issues.
- The New Zealand dollar remains under additional pressure in the midst of growing signs of demand weakening from China.
The NZD/USD pair continues to weaken for the second consecutive session, quoting about 0.5940 during the European session on Monday. The fall is largely driven by a strengthening of the US dollar (USD) in the middle of relaxation signals between the US and China.
China announced the exemption of certain US imports of its high tariffs of 125% on Friday, according to business sources. This development has generated optimism that the prolonged commercial dispute between the two greatest economies in the world could be close to its end.
In addition, the US Secretary of Agriculture, Brooke Rollins, declared Sunday, according to Reuters, that the Trump administration is participating in daily discussions with China on tariffs. Rollins also pointed out that negotiations with other commercial partners were advancing and that several trade agreements were “very close” to complete.
Despite the positive feeling, the yields of the US Treasury bonds remained moderate on Monday, with the 2 and 10 years bonds, performing 3.75% and 4.24%, respectively, while investors expect key economic data that is expected for later this week to evaluate the initial effects of the tariffs of US President Donald Trump.
The New Zealand dollar (NZD) also faces additional pressure in the middle of the deceleration signals from China. Reports indicate that some Chinese manufacturers are suspending production and looking for alternative markets in response to US tariffs, which leads to a reduction in orders and affects employment. Although it is not yet generalized, these interruptions could ultimately harm the New Zealand export sector, given China’s status as an important commercial partner.
In addition, the NZD is still under pressure as markets expect more and more than the New Zealand Bank Reserve (RBNZ) to deliver an additional monetary stimulus. A 25 basic points rate cut for the May meeting of the RBNZ has been largely incorporated, with forecasts suggested that the fees could turn bottom in 2.75% by the end of the year.
New Zealand Faqs dollar
The New Zealand dollar (NZD), also known as Kiwi, is a well -known currency among investors. Its value is largely determined by the health of the neozyous economy and the policy of the country’s central bank. However, there are some peculiarities that can also make the NZD move. The evolution of the Chinese economy tends to move Kiwi because China is the largest commercial partner in New Zealand. The bad news for the Chinese economy is probably translated into less neozyous exports to the country, which will affect the economy and, therefore, its currency. Another factor that moves the NZD is the prices of dairy products, since the dairy industry is the main export of New Zealand. The high prices of dairy products boost export income, contributing positively to the economy and, therefore, to the NZD.
The New Zealand Reserve Bank (RBNZ) aspires to reach and maintain an inflation rate between 1% and 3% in the medium term, with the aim of keeping it near the midpoint of 2%. To do this, the Bank sets an adequate level of interest rates. When inflation is too high, RBNZ rises interest rates to cool the economy, but the measure will also raise bond performance, increasing the attractiveness of investors to invest in the country and thus boosting the NZD. On the contrary, lower interest rates tend to weaken the NZD. The differential type of types, or how they are or is expected to be the types in New Zealand compared to those set by the Federal Reserve of the US, can also play a key role in the NZD/USD movement.
The publication of macroeconomic data in New Zealand is key to evaluating the status of the economy and can influence the valuation of the New Zealand dollar (NZD). A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and can encourage the New Zealand reserve bank to increase interest rates, if this economic strength is accompanied by high inflation. On the contrary, if the economic data is weak, the NZD is likely to depreciate.
The New Zealand dollar (NZD) tends to strengthen during periods of appetite for risk, or when investors perceive that the general market risks are low and are optimistic about growth. This usually translates into more favorable perspectives for raw materials and the so -called “raw material currencies”, such as Kiwi. On the contrary, the NZD tends to weaken in times of turbulence in markets or economic uncertainty, since investors tend to sell the most risky assets and flee the most stable shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
