NZD/USD gains to near 0.5730 as US Dollar faces selling pressure
- NZD/USD rises to near 0.5730 as the US Dollar weakens amid an upbeat market mood.
- Growing optimism over Russia-Ukraine peace has diminished the safe-haven appeal of the US Dollar.
- The RBNZ cut its OCR by an outsize rate for the third time in a row.
The NZD/USD pair moves higher to near 0.5730 in European trading hours on Thursday. The Kiwi pair gains as the US Dollar (USD) weakens, with the US Dollar Index (DXY) sliding marginally below the key level of 107.00.
The US Dollar weakens as the risk sentiment seems favorable for risk-sensitive currencies. The risk-on mood is the outcome of investors turning confident over the potential Russia-Ukraine truce. Market participants have become more hopeful for an end to the three-year-long war in Ukraine after United States (US) President Donald Trump agreed to have more peace talks with Russia.
President Trump announced that he will also meet Russian leader Vladimir Putin before the end of this month. Positive developments in Russia-US peace talks are expected to weaken the appeal of safe-haven assets.
On the monetary policy front, the Federal Open Market Committee (FOMC) minutes of the January meeting show that officials hesitate to cut interest rates as Trump’s economic policies are expected to boost inflationary pressures.
Meanwhile, the New Zealand Dollar (NZD) performs strongly as market participants had already priced in that the Reserve Bank of New Zealand (RBNZ) will cut its Official Cash Rate (OCR) by 50 basis points (bps) to 3.75% on Wednesday. The RBNZ reduced its OCR by an outsize rate for the third time in a row, with officials remaining worried about moderating inflation and a fragile economy.
New Zealand Dollar PRICE Today
The table below shows the percentage change of the New Zealand Dollar (NZD) against listed major currencies today. The New Zealand Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.23% | -0.84% | -0.11% | -0.48% | -0.49% | -0.27% | |
| EUR | 0.14% | -0.09% | -0.71% | 0.03% | -0.34% | -0.35% | -0.15% | |
| GBP | 0.23% | 0.09% | -0.61% | 0.12% | -0.25% | -0.26% | -0.04% | |
| JPY | 0.84% | 0.71% | 0.61% | 0.74% | 0.38% | 0.32% | 0.57% | |
| CAD | 0.11% | -0.03% | -0.12% | -0.74% | -0.36% | -0.38% | -0.16% | |
| AUD | 0.48% | 0.34% | 0.25% | -0.38% | 0.36% | -0.02% | 0.19% | |
| NZD | 0.49% | 0.35% | 0.26% | -0.32% | 0.38% | 0.02% | 0.22% | |
| CHF | 0.27% | 0.15% | 0.04% | -0.57% | 0.16% | -0.19% | -0.22% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
RBNZ Governor Adrian Orr has guided that the central bank could slow down its policy-easing pace and reduce interest rates by 25 bps in the next two policy meetings.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.