- The NZD/USD attracts some buyers around 0.5865 in the early Asian session on Tuesday.
- The US and China agreed a 90 -day pause in tariffs and a reduction in reciprocal tariffs.
- Markets expect two additional rate cuts towards the end of the year.
The NZD/USD pair quotes in positive territory around 0.5865 during the Asian session on Tuesday. The New Zealand dollar (NZD) is strengthened against the dollar after the announcement of a commercial agreement between the US and China, which relieves the fears of a commercial war between the two largest economies in the world. The operators will be attentive to the US Consumer Price Index (IPC) of April, which will be published later on Tuesday.
The president of the United States, Donald Trump, celebrated a “total restart” in relations between China and the USA after the countries agreed a 90 -day break in tariffs and a reduction of 115 percentage points in reciprocal tariffs. With the deduction of 115 percentage points, Chinese tariffs on US products will be reduced to 10%, while the US tax on Chinese products will be reduced to 30%. These positive developments provide some support to the Kiwi, which acts as Proxy of China, since China is an important commercial partner of New Zealand.
On the other hand, the decrease in commercial tensions between the two largest economies in the world gives investors its clearest indication so far that the Trump administration is adopting a softer approach than expected, which generates hope that the US economy can avoid a recession. This could raise the US dollar (USD) and create a wind against the pair.
Swaps markets have discounted the first rate cut of 25 basic points (PB) of the Fed for the September meeting, and expect two additional rates reductions towards the end of the year. Last week, they indicated three cuts this year, with a probable change as soon as in July.
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.
