- NZD/USD Moves Higher to Approximately 0.5770 During Friday’s Asian Session.
- The Trump administration imposed a new tariff rate of 145% on Chinese goods.
- RBNZ Has Room for Additional Interest Rate Cuts.
NZD/USD Holds Strong Above 0.5750 Amid Global Trade Concerns
The NZD/USD pair has remained resilient above the key 0.5750 level, despite rising concerns surrounding the ongoing trade tensions between the US and China. The Kiwi Dollar has managed to maintain its position, supported by broad USD weakness amid uncertainties in the global economic landscape.
US-China Trade Tensions Weigh on Market Sentiment
Trade tensions between the US and China continue to stir volatility in global markets. Former President Trump recently announced a 90-day pause on tariffs for all countries, except China. However, his comments on the potential 145% tariff on Chinese goods, along with a pre-existing 20% levy over fentanyl issues, have fueled concerns about an escalating trade war. The threat of prolonged trade disputes has heightened fears of a global recession, which has weighed heavily on the US Dollar and provided support to risk-sensitive currencies like the NZD.
RBNZ Rate Cut Pressures Kiwi but Limits Further Decline
On the domestic front, the Reserve Bank of New Zealand (RBNZ) recently cut its key interest rate by 25 basis points in response to slower inflation and weakening economic conditions. While this rate cut has put some pressure on the New Zealand Dollar, the market is pricing in the potential for further rate cuts, possibly up to 100 basis points by 2025. This has somewhat limited the downside potential for the NZD, as further easing measures from the RBNZ are already priced into the currency.
Outlook for NZD/USD Amid Continued Uncertainty
With the US-China trade conflict showing no signs of resolution, and with the RBNZ likely to remain dovish in the near future, the NZD/USD pair is expected to maintain its cautious upward momentum. While there is room for further NZD appreciation if the US Dollar continues to weaken, the outlook remains uncertain as global trade and economic conditions remain fluid.
