- The NZD/USD climbs about 0.5580 in the Asian session on Tuesday.
- Traders are transported to the price for five Fed rates by the end of the year.
- The Central Bank of China said it would provide lending support to dominant funds to stabilize the market.
The NZD/USD pair attracts some receivers on Tuesday to 0.5580 during the trading hours. US President Donald Trump’s tariffs about trade partners feared the potential recession in the United States, focused on Greenback. New Zealand Reserve Bank (RBNZ) interest rate decision will take the center on Wednesday.
Since the increasing fears of a stagnation in the US intensifying pricing in the United States, the Federal Reserve (FED) from five 25 basis points (BPS) is pricing in ratio deduction. According to the CME Fedwatch vehicle, the derivative markets now mean the possibility of reducing ratios from 14% a week ago at the next meeting of the FED on May 6-7. This year, the increasing expectation of more Fed ratio reduction is dragging US dollar (USD) lower and serves as a tail wind for NZD/USD.
On the other hand, China’s warning plans can support China-Proxy Kiwi, as China is a major trade partner in New Zealand. China Halk Bank (PBOC) said it would provide support for a sovereign fund, as it strictly supports the decision to buy more shares in the early hours on Tuesday. China Central Bank said in a statement, Central Huijin Investment Ltd.
All eyes will be in the RBNZ interest rate decision on Wednesday, which is expected to reduce the official cash rate (OCR) to 25 BPS to 3.5%. Movement comes in the midst of signs of the weakness of the labor market weakness. Approximately 90% of economists from the Reuters survey expects to be cut more than 25 BPS in May. The Median estimate has shown that there was a decrease of 25 BPS in the third quarter, which will bring the OCR to 3.00% by the end of September.
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.
