- The NZD/USD drops to about 0.5950 during the Asian session on Monday.
- China announced new measures to boost economic growth and employment.
- The RBNZ is expected to cut its OCR of 3.5% in 25 bp at the May meeting.
The NZD/USD torque softens around 0.5950 during the Asian negotiation hours of Monday, pressed by the renewed demand of the US dollar (USD). The signs that global commercial tensions between the United States and China may be decreasing provide some support to the dollar. Operators evaluate China’s press conference on policies and measures on Monday.
The Politburo emphasized efforts to maintain stability supporting companies and workers most affected by US tariffs, according to Friday’s statement. The National Development and Reform Commission, the Ministry of Human Resources and Social Security, the Ministry of Commerce and the Popular Bank of China (PBOC) reiterated on Monday the plans to accelerate debt issuance, facilitate monetary policy and promised to support employers to safeguard jobs.
Chinese authorities announced new measures to boost economic growth and employment. They will closely monitor internal and external changes and improve the set of political tools. Beijing added that some new policies will be implemented in the second quarter. This, in turn, could raise the Kiwi, which acts as Proxy of China, since China is an important commercial partner of New Zealand.
The US Secretary of Agriculture, Brooke Rollins, said Sunday that the Trump administration is having daily conversations with China about tariffs. Rollins also declared that there were ongoing conversations between the US and China and that trade negotiations with other nations were “very close.” The decrease in fears on commercial tensions supports the dollar and acts as a wind against for the NZD/USD for the moment.
Meanwhile, the increasing bets of additional rate cuts by the New Zealand Reserve Bank (RBNZ) could weigh on the New Zealand dollar (NZD). Markets completely expect the RBNZ to cut its OCR of 3.5% in 25 basic points (PB) in May, with an additional reduction to 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.
