- The NZD/USD earns land about 0.6010 in the Early Asian session on Thursday.
- The RBNZ maintained its reference interest rate without changes in its July meeting.
- Operators prepare for weekly applications for unemployment subsidy in the US, which will be published later on Thursday.
The NZD/USD extends the rebound to around 0.6010 during the Early Asian Session on Thursday. The New Zealand dollar (NZD) is strengthened against the US dollar as the New Zealand reserve bank adopted a cautious tone at its last policy meeting. Operators will keep an eye on weekly applications for unemployment subsidy in the US, which will be published later on Thursday.
The RBNZ maintained the official cash (OCR) rate in 3.25% at its July meeting on Wednesday, citing a high level of uncertainty and short -term risks for inflation. The New Zealand Central Bank has paused the flexibility cycle for the first time since it began to reduce rates in August 2024. The current financing cost is at the lowest level since August 2022.
Those responsible for the policy said that the decision to maintain the interest rate would allow the Central Bank to evaluate whether the weakness in the domestic economy persists and how inflation and inflation expectations evolve before their next meeting in August. Volkmar Baur, a currency analyst in Commerzbank, said that the policy update points to a continuous caution by the RBNZ, “and we continue to assume that it will take a maximum of another step before the cycle ends. This should support the NZD.”
In the front of the USD, the US president, Donald Trump, said Tuesday that he would impose a 50% tariff on the imported copper and soon introduce long threatened taxes on semiconductors and pharmaceutical products, which generates fears of a global commercial war.
The US and China agreed a commercial framework in June that restored a fragile truce, but with many still clear details. Investors will closely follow developments around the commercial agreement between the US and China. Any renewed commercial tension could undermine the Kiwi, which acts as a proxy of China, since China is an important commercial partner of New Zealand.
New Zealand dollar – Frequently Questions
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.
