- NZD/USD trading in positive territory around 0.5950 in the Asian session on Wednesday.
- The ongoing uncertainty of tariffs and fear of a slowdown in the United States economy will weigh the US dollar.
- Traders expect RBNZ to cut its OCR with 25 bps in May.
The NZD/USD pair boosts close to 0.5950 at Asian trading time on Thursday, powered by the weakening of the US dollar (USD). Entrepreneurs are paying for US weekly initial jobless claims, Chicago Fed National Activity Index, durable commodity orders, and existing home sales, which should be later on Thursday.
US Secretary of Treasury Scott Bescent said Tuesday that the ongoing tariff show against China was unstable, and he expected a “de-escalation” to the trade war between the two largest economies in the world in the near future. Late Wednesday, United States President Donald Trump's administration said it spoke in 90 countries about tariffs.
The Trump administration noted that the US will set tariffs for China over the next two to three weeks, and it depends on China how eventually the tariffs may go down. The uncertainty surrounding Trump's trade policies has increased concerns about slowing the US economy and lower greenback.
In front of Kiwi, the rising hopes that the Reserve Bank of New Zealand (RBNZ) will lower the official cash rate (OCR) at the May Meeting may wrap for the pair. The markets are fully hoped that RBNZ will cut 3.5% OCR through 25 basis for score (BPS) in May, with further reduction to 2.75% by the end of the year.
New Zealand Dollar Faqs
The New Zealand (NZD) dollar, also known as Kiwi, is a well -known currency with investors. Its value is widely determined by New Zealand's economic health and policy on the country's central bank. However, there are some unique specifics that can also make NZD transfer. China's economic performance tends to move Kiwi because China is the largest New Zealand trading partner. The bad news for China's economy is likely to mean less exports to New Zealand in the country, which has hit the economy and thus its money. Another factor moving to the NZD is dairy prices because the dairy industry is the major export of New Zealand. High dairy prices strengthen exporting income, contributing economic positive and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% in medium term, with focus to keep it close to 2% mid-point. To this day, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the transfer will make the bond increased, increasing the appeal of investors to invest in the country and thus strengthen the NZD. Conversely, lower interest rates tend to soften the NZD. The so-called variation rate, or how the rates in New Zealand are or are expected to be comparable to the sets of the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
The release of macroeconomic data to New Zealand is key to assessing the state of the economy and may affect appreciation for the New Zealand Dollar (NZD). A strong economy, based on high economic growth, low unemployment and high confidence are good for NZD. High economic growth attracts foreign investment and may encourage New Zealand's Reserve Bank to increase interest rates, if this economic strength is accompanied by elevated inflation. Conversely, if economic data is weak, NZD is likely to be deducted.
The New Zealand (NZD) dollar tends to be strengthened in times of risk, or when investors find that greater market risks are low and optimistic to grow. It tends to lead to a more favorable perspective for goods and is called 'commodity currencies' such as kiwi. In contrast, the NZD tends to weaken in times of market disturbance or economic uncertainty because investors tend to sell increased risk properties and flee to more stable safe havens.
