- The NZD/USD rises slightly to about 0.6025 at the Early Asian Session on Wednesday.
- The reduction in the expectations of RBNZ feat cuts support the New Zealand dollar.
- The Fed is expected to maintain stable interest rates at your June meeting on Wednesday.
The NZD/USD gains strength to around 0.6025 during the early Asian session on Wednesday. The New Zealand dollar (NZD) rises in front of the US dollar (USD) in a reduced expectations of rates cuts by the New Zealand Reserve Bank (RBNZ). Later on Wednesday, the decision of interest rates of the US Federal Reserve (FED) will be at the Center for Care.
The highest inflation in New Zealand has fed the argument so that the RBNZ maintains the interest rates at 3.25% in July, which provides some support to the Kiwi. “The selected price indices of the month of May are unequivocally of a hard line. In general, the monthly data has turned out to be more inflationary than we expected,” said Stephen Toplis, head of research of BNZ.
The economic data of the US weakest than expected published on Tuesday weigh on the US dollar (USD) and act as a tail wind for the pair. The US retail sales fell 0.9% in May, compared to the 0.1% decrease (reviewed from +0.1%) registered in April, according to the US Census Office. This reading was below the market consensus of -0.7%.
On the other hand, the increase in geopolitical tensions in the Middle East could boost shelter as the USD. The president of the USA, Donald Trump, published on his social media platform late Tuesday, asking for the “unconditional surrender” of Iran. Investors are concerned that the United States participates in the Israel-Iran conflict.
All eyes will be placed in the Fed fees decision and the press conference later on Wednesday. It is anticipated that the US Central Bank maintain the interest rate without changes in the June meeting. The operators now see a possibility of almost 80% of a Fed feat cut in September, followed by another in October, according to Reuters.
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.
