- The NZD/USD softens around 0.6080 in the Asian session on Thursday.
- The PMI of Caixin Services of China fell to 50.6 in June, weaker than expected.
- The private payrolls of the United States in June registered the first fall in more than two years.
The NZD/USD loses traction about 0.6080 during Thursday’s Asian negotiation hours. The New Zealand dollar (NZD) weakens against the US dollar (USD) after China’s disappointing economic data. The US Non -Agricultural Payroll (NFP) data for June will be the culminating point later on Friday.
The data published by Caixin on Thursday showed that the Purchasing Managers Index (PMI) of Services fell to 50.6 in June, compared to 51.1 in May. This figure was weaker than the expectation of 51.0. China’s negative economic data exert some sale pressure on the Kiwi, since China is an important commercial partner of New Zealand.
It is widely expected that the New Zealand Bank Reserve Pause its relaxation cycle at its July meeting next week. The RBNZ has already cut the rates at 225 basic points (PB) up to 3.25%. Policies responsible suggested that interest rates are now in the neutral zone and want to wait to see the impact of previous cuts.
As for the US dollar, the US work reports weaker than expected have backed the market expectations of an interest rate cut by the Federal Reserve (Fed) this year. This, in turn, could drag the dollar down and create a wind in favor for the NZD/USD. According to the Fedwatch of the CME, the short -term interest rates are now valuing almost one in four possibilities of a rate cut at the July meeting after moderate comments, compared to less than one in five before.
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.
