- The NZD/USD is appreciated as the market feeling improves after the postponement of Trump’s reciprocal tariffs.
- The weakest US retail data has intensified the speculation that the Fed could lower interest rates only later in the year.
- It is widely anticipated that the RBNZ will reduce its interest rates by 50 basic points to 3.75% on Wednesday.
The NZD/USD extends its winning streak for the third consecutive day, quoting around 0.5740 during the first European hours on Monday. Liquidity during the North American session could be kept low since all the main financial markets of the US will be closed Monday by the Federal President of the Presidents Day.
This rise in the NZD/USD is attributed to the improvement of the feeling of the market, supported by the decision of the US president, Donald Trump, to delay the implementation of reciprocal tariffs. In addition, the US dollar (USD) weakens since a disappointing US retail sales report has revived the speculation that the Federal Reserve (Fed) could cut interest rates at the end of this year, despite The ongoing inflation concerns.
Friday’s office data on Friday showed that US retail sales fell 0.9% in January, after a revised increase of 0.7% in December (previously reported as 0.4%). This fall was more pronounced than the market expected, which foresaw a 0.1%decrease.
The US dollar index (DXY), which tracks the performance of the US dollar compared to six main currencies, is maintained under pressure for third consecutive session due to the weakest yields of US Treasury Bonds , the DXY is around 106.70, while the yields of the US Treasury bonds at 2 and 10 years are in 4.26% and 4.47%, respectively.
The New Zealand Reserve Bank (RBNZ) has a meeting scheduled on Wednesday and is expected to reduce interest rates at 50 basic points up to 3.75%. It is likely that the Central Bank also indicates a more gradual rhythm of future reductions, pointing at a rate of 3.0% or 3.25% by the end of the year. Meanwhile, the Business Nz (PSI) services performance index increased to 50.4 in January, from a revised 48.1 in December, marking a return to a slight expansion in the service sector after ten months of contraction.
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.
