- The NZD/USD falls to around 0.5915 in the Asian session on Monday.
- The Julio US NFP report showed a deterioration in the labor market, increasing the chances of a reduction of Fed rates in September.
- New Zealand employment data will be the culminating point later on Wednesday.
The NZD/USD collapses collapse about 0.5915 during Monday’s Asian negotiation hours. The uncertainty about tariffs between the United States (USA) and China weighs on the Kiwi, which acts as proxy of China. The fall could be limited due to an US Employment Report and the increase in fees for features of the Federal Reserve (Fed) in September. The operators prepare for the New Zealand unemployment rate data, which will be published later on Wednesday.
The US employment data, worse than expected, increased bets for imminent fed fees and acted as a wind against the dollar. Friday data showed that the growth of employment in the US did not meet expectations in July, while the non -agricultural payroll (NFP) count of the previous two months was reviewed downward in 258,000 jobs, indicating a strong deterioration in the conditions of the US labor market.
The markets are now valuing almost 95% probabilities that the FED reduces fees next month due to US employment data worse than expected, with more than 63 basic points (PB) of expected cuts for December, according to Reuters.
China faces a term of August 12 to reach a tariff agreement with the president of the USA Donald Trump, after Beijing and Washington reached a preliminary agreement in June to end weeks of reciprocal tariffs increasing, according to Reuters. Any sign of increasing commercial tensions could drag the Kiwi, which acts as Proxy of China, downward, since China is an important commercial partner of New Zealand.
New Zealand employment data for the second quarter (Q2) will be published later on Wednesday. The unemployment rate in New Zealand is expected to increase to 5.3% in Q2 from 5.1% in the previous reading. Any surprisingly stronger result than expected could raise the New Zealand dollar (NZD) against the US dollar (USD) in the short term.
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.
