- The NZD/USD weakens around 0.5955 in the early Asian session on Wednesday.
- It is unlikely that the US Fed cuts rates at its July meeting on Wednesday.
- Commercial optimism and the possible extension of the commercial truce between the US and China could help limit the losses of the NZD.
The NZD/USD pair extends its fall to around 0.5955 during the Early Asian Session on Wednesday. The uncertainty around the tariff truce between the United States (USA) and China continues to undermine the Kiwi, which acts as Proxy of China. Investors will be attentive to the Federal Reserve Interest Decision (FED) of the US later on Wednesday, without changes in the expected rates.
Analysts expect the US Fed to maintain interest rates without changes in 4.25% to 4.50% at the end of their two -day monetary policy meeting on Wednesday. Operators are currently valuing in almost 97% the chances that there are no changes in interest rates at the July meeting, according to the Fedwatch tool of the CME.
Fed members remain cautious about the possible inflationary impact of the aggressive new tariff policy of the US president, Donald Trump. The operators will be attentive to the press conference of the president of the FED, Jerome Powell, after the policy meeting. A more aggressive result than expected at the meeting could boost the dollar and act as a wind against for the pair.
The attention will be transferred to the US employment data for July, which will be published later on Friday. It is projected that the US economy will add 110,000 jobs in July, while it is estimated that the unemployment rate will increase to 4.2% in July from 4.1% in June.
The US Treasury Secretary, Scott Besent, said the US and China will continue the conversations to hold a tariff truce before the deadline in two weeks, and Trump will make the final decision on any extension. Besent discouraged any expectation that Trump rejects the extension. Commercial optimism and a possible extension of the commercial truce between the US and China could provide some support to the New Zealand dollar (NZD), which acts as Proxy of China, in the short term, since China is an important commercial partner of New Zealand.
New Zealand dollar – Frequently Questions
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.
