- The NZD/USD lost its land around 0.5985 at the Asian session of Friday.
- China told the US to cancel all unilateral tariffs if it wanted to talk.
- China's financial ministry said the current world economic growth momentum is not sufficient due to tariff threats and trade wars.
The edges of the NZD/USD pair were below 0.5985 at the Asian session on Friday, forced by the firmer greenback. Lack of development towards denial of the US-China trade deal shows some pressure seller in China-Proxy Kiwi. The final reading of Michigan's consumer sentiment should be later on Friday.
US president Donald Trump said on Thursday that his administration was talking to China in trade. Meanwhile, China said no negotiations were held in the economy and trade, and it encouraged the US to raise all unilateral tariff steps if it really wanted to resolve the issue. Concerns over trading tensions between the two largest economies in the world can break the New Zealand Dollar (NZD), as China is a major trading partner in New Zealand.
The rising bet that the Reserve Bank of New Zealand (RBNZ) will lower the official cash (OCR) rate at the May meeting may contribute to the NZD collapse. 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.
China's financial ministry said Friday that the current world economic growth momentum was inadequate, with tariff wars and trade that further affect economic and financial stability. Meanwhile, People's Bank of China (PBOC) Pan Gongsheng noted that economic destruction and trade tensions continue to interfere with industrial supply chain and weaken the momentum of global growth. However, any positive development surrounding Chinese stimulating steps can help limit kiwi losses in the near term.
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.
