- NZD/USD softened until 0.5730 in the Asian session on Thursday.
- China will face a 54% tariff within the scope of the new Trump policy.
- Traders raise their bets that Trump will reduce their rates in June because Trump puts new tariffs.
The NZD/USD pair is faced with a sales pressure of close to 0.5730 in the early Asian session on Thursday. US President Donald Trump announced the mutual tariffs that would increase a trade war after the New Zealand Dollar (NZD) weakened against the US Dollar (USD).
Trump said on Wednesday. A White House official said Trump slapped a total tariff rate of 54% for imports from China since April 9th.
Chinese imports had already been subject to a 20% tariff. According to the official, 34% will be applied in mutual tariffs. Potential trade war between China and economic uncertainty can lead China-proxy kiwi lower because China is a major trade partner of New Zealand.
On the other hand, traders, the Federal Reserve (FED) will start to reduce interest rates in June and will provide a total of three quarters of points discounts until October, because Trump, analysts can increase inflation, but expected to slow down the economy, explained new tariffs.
According to the CME Fedwatch vehicle, short -term interest rate -term transactions are priced at a June meeting of approximately 60% of an Fed ratio of approximately 70% without disclosing tariffs. This can weaken the USD and create a tail wind for the pair.
New Zealand Dollar FAQ
The New Zealand Dollar (NZD), also known as Kiwi, is a traded currency among investors. Its value is generally determined by the health of the New Zealand economy and the Central Bank Policy of the Central Bank of the country. Nevertheless, there are some unique features that can move NZD. The performance of the Chinese economy tends to move Kivi because China is the largest trade partner in New Zealand. Bad news for the Chinese economy probably means less New Zealand exports to the country, hitting the economy and therefore the currency. Another factor carrying NZD is milk prices because the milk industry is the main export of New Zealand. High milk prices increase export income by making a positive contribution to the economy and therefore NZD.
The New Zealand Reserve Bank (RBNZ) aims to obtain and maintain an inflation rate of 1% to 3% in the medium term and focuses on keeping it close to 2% midpoints. For this purpose, the bank determines an appropriate interest rates. When the inflation is too high, RBNZ will increase interest rates to cool the economy, but the movement will also further increase bond returns and investors will invest in the country and thus increase the NZD. On the contrary, low interest rates tend to weaken NZD. Ratio difference or how the rates in New Zealand are expected to be compared or compared with the US Federal Reserve, and may also play an important role in transporting the NZD/USD pair.
Macroeconomic data bulletins in New Zealand are key to assessing the state of the economy and may affect the valuation of New Zealand Dollar (NZD). High economic growth is good for NZD, a powerful economy based on low unemployment and high trust. High economic growth attracts foreign investment, and if this economic power comes together with high inflation, it can encourage the New Zealand Reserve Bank to increase interest rates. On the contrary, if the economic data is weak, NZD is likely to depreciate.
New Zealand Dollar (NZD) tends to strengthen in risk-next periods, or investors perceive that larger market risks are low and that they are optimistic about growth. This tends to lead to a more positive appearance called ‘commodity currencies’ such as commodities and kiwi. On the contrary, NZD tends to slimming at market turbulence or economic uncertainty times, as investors tend to sell higher risk assets and escape to more stable safe pens.
