- The NZD/USD moves up to 0.5925 in Monday’s Asian session, adding 0.26% in the day.
- The improved risk feeling supports the New Zealand dollar.
- Fed officials highlighted economic uncertainty and commercial policy risks.
The NZD/USD wins traction about 0.5925 during the Asian negotiation hours on Monday. The New Zealand dollar (NZD) is strengthened against the US dollar amid the decrease in concerns about a commercial war between the United States and China. Investors will be attentive to the joint declaration of the two largest economies in the world about the commercial conversations of Geneva.
After meetings in Geneva, Treasury Secretary Scott Besent and Commerce Representative Jamieson Greer announced on Sunday that an agreement with China had been reached to reduce the US trade deficit. Meanwhile, the Vice Prime Minister of China, He Lifeng, described commercial conversations with US officials as “a first important step” to stabilize bilateral business relations. Any positive development around commercial conversations between the US and China could provide some support to the Kiwi, which acts as Proxy of China, since China is an important commercial partner of New Zealand.
A series of Federal Reserve officials (FED) on Friday emphasized the economic uncertainty and risks of commercial policy, since US tariffs are prone to inflation and complicate the Fed task to balance its double mandate objectives. Swaps markets have discounted the first reduction of 25 basic points (PB) rates (PB) for the July meeting, and expect two additional reductions towards the end of the year.
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.
