- The NZD/USD moves downward on Wednesday in the middle of a modest rebound of the USD from a minimum of several months.
- China’s economic problems and the escalation of commercial tensions between the US and China undermine Kiwi.
- Fed rates cut expectations and a positive risk tone limit the USD and support the US IPC.
The NZD/USD torque has difficulty capitalizing on the bounce of the previous night from a minimum of several days, around the region of 0.5680-0.5675 and attracts new sellers on Wednesday in the midst of a modest rebound of the US dollar (USD). Cash prices remain depressed during the first half of the European session and are currently traded near the 0.5700 brand, with a 0.15% drop in the day, while operators expect to interest the publication of inflation data to the US consumer.
Investors will be attentive to the Crucial Report of the US Consumer Price Index (CPI) to obtain clues about the federal reserve fees trajectory (FED). This, in turn, should influence the short -term USD price dynamics and provide significant impulse to the NZD/USD. Looking ahead to the risk of key data, operators choose to reduce their bearish bets on the USD after the recent fall to the lowest level since October 16. Apart from this, the worsening of the relations between the US and China and the persistent deflationary pressures in the second largest economy in the world, which tend to undermine antipodes, weigh on the NZD/USD.
In fact, China’s National Statistics Office (NBS) reported Sunday that consumer prices fell to its lowest level in more than a year and prices at the factory door contracted for 29 consecutive months. Meanwhile, US president Donald Trump decided to double the tariff on Chinese imports at 20% on March 4 and also appointed China as a currency manipulator for the first time in decades. In response, China announced retaliation tariffs of up to 15% on US products, increasing the risk of a higher escalation of the commercial war between the two largest economies in the world and exercising some pressure on Kiwi.
Any significant appreciation of the USD, however, seems elusive following the growing bets that a deceleration driven by tariffs in the economic activity of the US could force the Federal Reserve (Fed) to cut interest rates several times this year. Apart from this, a generally positive tone around stock markets helps to limit the secure shelter dollar and offers some support to the New Zealand dollar (NZD), risk sensitive. This, in turn, justifies the caution before opening aggressive bomberies around the NZD/USD and confirms that the recent upward movement observed during the last week has lost impulse.
Commercial War between the US and China Faqs
In general terms, “Trade War” is a commercial war, an economic conflict between two or more countries due to the extreme protectionism of one of the parties. It implies the creation of commercial barriers, such as tariffs, which are in counterbarreras, increasing import costs and, therefore, the cost of life.
An economic conflict between the United States (USA) and China began in early 2018, when President Donald Trump established commercial barriers against China, claiming unfair commercial practices and theft of intellectual property by the Asian giant. China took retaliation measures, imposing tariffs on multiple American products, such as cars and soybeans. The tensions climbed until the two countries signed the Phase one trade agreement between the US and China in January 2020. The agreement required structural reforms and other changes in China’s economic and commercial regime and intended to restore stability and confidence between the two nations. Coronavirus pandemia diverted the attention of the conflict. However, it is worth mentioning that President Joe Biden, who took office after Trump, kept the tariffs and even added some additional encumbrances.
Donald Trump’s return to the White House as the 47th US president has unleashed a new wave of tensions between the two countries. During the 2024 election campaign, Trump promised to impose 60% tariff particularly in investment, and directly feeding the inflation of the consumer price index.
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.
