- The NZD/USD quotes in positive territory around 0.5680 in the Asian session on Friday.
- The Employment Report keeps RBNZ on the way to cut 50 bp in February.
- Fed officials said uncertainty creates the environment so that the FED reduces the rhythm of the cuts.
The NZD/USD pair is stronger about 0.5680 during Friday’s Asian negotiation hours. However, the rise in the torque could be limited before the highly agricultural payroll data (NFP) of the US for January, which will be published later on Friday.
China presented a challenge to the World Trade Organization on Wednesday against the new 10% tax of US President Donald Trump on Chinese imports and the withdrawal of an exemption from tariffs for low -value packages, citing “protectionist” acts that violate the WTO regulations. Investors will closely follow development around the renewed tensions of commercial war between the US and China, the two largest economies in the world. Any escalation sign could weigh on the Kiwi, since China is an important commercial partner of New Zealand.
New Zealand employment data for the fourth quarter (Q4) will keep the New Zealand Reserve Bank (RBNZ) on the way to cut the official cash rate (OCR) this month. This, in turn, could even weigh about the New Zealand dollar (NZD). Markets are now valuing almost 92% probability that RBNZ makes a rate of 50 basic points (PB) up to 3.75% on February 19. It would be the third consecutive cut of great magnitude.
The hard line posture of Federal Reserve officials (FED) could provide some support to the dollar. The president of the Fed of Chicago, Austan Goolsbee, said Thursday that uncertainty makes the Fed environment more nebulous, a reason to reduce the rhythm of the cuts. Meanwhile, the Vice President of the Fed, Philip Jefferson, said Tuesday night that they faced uncertainty about Trump’s policies, adding that the robust economy would allow them to adopt a cautious approach for a greater flexibility of politics.
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.
