- The NZD/USD advances around 0.6035 in the first bars of the European session on Thursday, driven by the weakening of the US dollar.
- The weakest inflation data of the US weakens the US dollar and act as a wind against the pair.
- Trump said the commercial agreement with China is ‘made’, although details of China were missing.
The NZD/USD gains strength to around 0.6035 during the early Asian session on Thursday. The most cold US inflation data and the increase in bets due to a federal reserve rate cut (FED) in September exert some sale pressure over the dollar. The US Production Price Index (IPP) and the initial weekly applications for unemployment will be the points highlighted later on Thursday.
Inflation in the US increased less than expected for the fourth consecutive month, which weighs on the US dollar (USD). The US CPI rose 2.4% year -on -year in May compared to the previous 2.3%, according to the US Labor Statistics Office on Wednesday (BLS). This reading was below the market expectation of 2.5%. The underlying IPC, which excludes volatile food and energy prices, rose 2.8% year -on -year in May, compared to the 2.9% consensus.
The coldest inflation than expected in the US in May has led the operators to increase their bets due to a federal reserve rate cut (FED). Future operators of short -term interest rates have discounted almost 68% probability that the Fed cuts the rates at 25 basic points (PBS) for September, compared to 57% before the US CPI data, now they also see a small but growing possibility of an early rate cut, putting around 18% of probability that this will happen in July 13% earlier on Wednesday.
The president of the USA, Donald Trump, said that the commercial agreement with China is ‘made’, although China’s details and confirmation were missing. In addition, US Secretary of Commerce, Howard Lutnick, declared that China tariffs will remain in current 55% without additional increases. The positive developments around the commercial conversations between the US and China also support the Kiwi, which acts as Proxy of China, since China is an important commercial partner of New Zealand.
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.
