- The NZD/USD wins traction to around 0.5740 at the Early Asian Session on Thursday.
- Trump’s unpredictable ads over tariffs undermine the US dollar.
- China’s deflationary pressures could limit the bullish potential of the Kiwi, which acts as China proxy.
The NZD/USD pair extends its upward trend to around 0.5740 during the Early Asian Session on Thursday, backed by the weakest US dollar (USD). The US Production Price Index (IPP) will be the culminating point later on Thursday, followed by initial weekly unemployment applications.
Concerns about the unpredictable commercial policies of US President Donald Trump have generated uncertainty among investors, which weighs on the dollar. Investors are concerned about the weakest economic data in the US, as well as the great cuts in the government workforce and government spending. Goldman Sachs analysts last week raised the probability of recession from 15% to 20%, citing that they see policy changes such as the main risk for the economy.
On the other hand, concerns about the persistent deflationary pressures in China, the largest export market in New Zealand, undermine the Kiwi. The consumer price index (CPI) of China in February did not meet the expectations and fell to its fastest rate in 13 months, while the prices of the producer prices persisted.
“China’s economy still faces deflationary pressure. While feeling improved with developments in the technological field, domestic demand is still weak,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.
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.
