- The NZD/USD gains ground around 0.6035 in the early Asian session on Friday.
- The US preliminary manufacturing PMI fell to 49.5 in July; The services PMI improved 55.2.
- USA and China will discuss the extension of the tariff term next week.
The NZD/USD PAR attracts some buyers about 0.6035 during the first hours of Asian negotiation on Friday. Optimism around new US trade agreements provides some support to the New Zealand dollar (NZD) against the dollar. Later on Friday, the orders of the US durable goods will be published for June.
The US dollar (USD) goes back in the midst of mixed results of the US economic agenda. This figure was weaker than the expected 52.5. Meanwhile, the PMI of Services rose to 55.2 in July from 52.9, stronger than estimated. Finally, the compound PMI rose to 54.6 in July compared to 52.9 above.
The Federal Open Market Committee (FOMC) will meet next week and anticipates that it maintains the stable rate, since those responsible for the policy prefer to expect clarity on the expected impact of tariffs on inflation. According to the CME Fedwatch tool, the markets are now valuing in almost 60% the probability of a quarter quarter rate in September by the Federal Reserve (Fed).
The US Treasury Secretary, Scott Besent, will meet with Chinese officials in Stockholm next week to discuss the extension of the term for commercial negotiations. Tariffs could return to 145% of the US side and 125% of the Chinese side in the absence of a commercial agreement or extension of the discussion. Any sign of increased commercial tensions could undermine the Kiwi, which acts as Proxy of China, since China is a significant commercial partner for 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.
