- The NZD/USD bounces amid optimism for a possible relief of commercial tensions between the US and China.
- New Zealand Prime Minister Luxon stressed that although financial markets experienced falls in early April, since then they have shown a partial recovery.
- The US dollar could recover impulse as the Federal Reserve indicates a more cautious position on monetary policy.
The NZD/USD is negotiated about 0.5970 during Thursday’s Asian session, bouncing after a fall of more than 1% in the previous session. The recovery is driven by optimism around a possible unworthy in commercial tensions between the US and China.
The secretary of the US Treasury, Scott Besent, will meet with China’s main economic official in Switzerland on Saturday in an attempt to reactivate stagnant commercial conversations. Additional support for the NZD came from China, the largest commercial partner in New Zealand, since Beijing intensified stimulus efforts to boost economic growth against trade -related challenges.
New Zealand Prime Minister Christopher Luxon commented on Thursday that although financial markets saw acute deterioration in early April, since then they have partially recovered, although volatility persists. Luxon emphasized the importance of the global environment, but expressed confidence in the economic recovery of New Zealand.
Meanwhile, the governor of the New Zealand Reserve Bank (RBNZ), Christian Hawkesby, warned that the country remains vulnerable to global commercial interruptions derived from the US tariff policies of the USA Hawkesby highlighted the weak labor market data and global market dysfunctions as main concerns.
The American dollar index (DXY) is around 99.70 at the time of writing, with potential to recover strength in the middle of cautious signals of the Federal Reserve (Fed). On Wednesday, the Fed maintained interest rates without changes in 4.25%–4.50%, but pointed out increasing risks due to inflation and unemployment, which adds economic uncertainty. According to CME’s Fedwatch tool, markets still anticipate a 25 basic points rate cut in July.
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.
