- The NZD/USD goes back around 0.5990 in the first Asian session on Friday.
- The increase in geopolitical tensions drives the US dollar, a safe refuge currency.
- The optimistic New Zealand GDP data could limit the fall of the Kiwi.
The NZD/USD loses land to about 0.5990 during the first Asian session on Friday. The US dollar (USD) is strengthened against the New Zealand dollar (NZD) in the midst of growing fears about a possible expansion of the conflict in the Middle East. The operators prepare for the decision on the interest rate of the Popular Bank of China (PBOC) and the manufacturing index of the Fed of Philadelphia later on Friday.
The conflict between Israel and Iran has entered its seventh day, since both countries carried out more air attacks on Thursday. White House spokeswoman, Karoline Leavitt, said US President Donald Trump will decide in two weeks if he attacks Iran. Concerns about a possible US participation in the air war between Israel and Iran increase safe refuge flows, benefiting the dollar.
The US Federal Reserve (FED) maintained its reference interest rate without changes in a range between 4.25% -4.50% at its June meeting on Wednesday. Fed officials retained the projections for two features of a quarter cord this year.
The president of the FED, Jerome Powell, pointed out a cautious tone about a possible additional relief, saying that he expects “significant” inflation in the future as a result of the aggressive commercial tariffs of Trump. The restrictive tone of the Fed contributes to the increase of the USD and creates a tail wind for the short term torque.
On the other hand, the Gross Domestic Product (GDP) report of New Zealand, stronger than expected, could help limit Kiwi losses. The New Zealand economy grew faster than expected in the first quarter (Q1), increasing 0.8% intertrmetral compared to the previous 0.5% (reviewed from 0.7%). This reading exceeded the market consensus of 0.7%.
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.
