NZD/USD surrenders some early gains even as US Dollar remains fragile
- NZD/USD gives up half of its early gains but is still trading higher to near 0.5980.
- Renewed US trade policy uncertainty has weighed heavily on the US Dollar.
- The US Supreme Court strikes down Trump’s tariff policy.
The NZD/USD pair gives back half of its early gains during the early European trading session on Monday after facing selling pressure above the psychological barrier of 0.6000. Still, the kiwi pair trades 0.13% higher to near 0.5980 as the US Dollar (USD) underperforms due to renewed uncertainty over the United States (US) trade policy.
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.35% to near 97.45.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.34% | -0.30% | -0.48% | -0.14% | 0.07% | -0.21% | -0.41% | |
| EUR | 0.34% | 0.04% | -0.15% | 0.21% | 0.42% | 0.13% | -0.05% | |
| GBP | 0.30% | -0.04% | -0.19% | 0.15% | 0.37% | 0.09% | -0.09% | |
| JPY | 0.48% | 0.15% | 0.19% | 0.36% | 0.58% | 0.29% | 0.13% | |
| CAD | 0.14% | -0.21% | -0.15% | -0.36% | 0.22% | -0.07% | -0.24% | |
| AUD | -0.07% | -0.42% | -0.37% | -0.58% | -0.22% | -0.28% | -0.46% | |
| NZD | 0.21% | -0.13% | -0.09% | -0.29% | 0.07% | 0.28% | -0.18% | |
| CHF | 0.41% | 0.05% | 0.09% | -0.13% | 0.24% | 0.46% | 0.18% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The appeal of the US Dollar diminishes as the US Supreme Court strikes down President Donald Trump’s tariff policy, calling it “unlawful”. In response, Trump announced 15% global tariffs to offset the impact of SC’s verdict.
In addition to the US trade policy uncertainty, weak Q4 Gross Domestic Product (GDP) and slower-than-expected growth in the S&P Global Purchasing Managers’ Index (PMI) data for February are also acting as a major drag on the US Dollar.
On the monetary policy front, investors await speeches from a slew of Federal Reserve (Fed) officials scheduled during the week. Currently, traders are confident that the Fed will keep interest rates unchanged in the March and April policy meetings, according to the CME FedWatch tool.
In New Zealand (NZ), Q4 Retail Sales data have come in stronger-than-projected. Earlier in the day, the data showed that Retail Sales grew 0.9%, faster than 0.6% estimates, but slower than the previous reading of 1.9%.
Going forward, the New Zealand Dollar (NZD) will be influenced by the People’s Bank of China’s (PBoC) monetary policy announcement on Tuesday.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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