NZD/USD holds gains around 0.6000 as US Dollar falters on tariff concerns
- NZD/USD appreciates as the US Dollar struggles amid uncertainty over White House economic policies.
- IMF’s Kristalina Georgieva said tariff-driven inflation supports cutting rates toward 3.25%–3.50% for full employment.
- New Zealand’s ANZ Business Confidence fell to 59.2 in February, the lowest since last October.
NZD/USD extends its gains for the third consecutive day, trading around 0.6000 during the Asian hours on Thursday. The pair appreciates as the US Dollar (USD) remains under pressure amid ongoing uncertainty over the White House’s economic policies.
US President Donald Trump said in his State of the Union (SOTU) address on Tuesday that the US economy is rebounding, defended tariffs as growth-supportive, and criticized the Supreme Court for striking down part of his tariff policy.
Additionally, International Monetary Fund Managing Director Kristalina Georgieva said US goods inflation has been partly driven by tariffs and suggested that reducing the federal funds rate toward 3.25%–3.50% would align with a return to full employment. However, she stressed that placingthe US public debt on a sustainable downward path will require firm fiscal action.
New Zealand’s ANZ Business Confidence Index declined to 59.2 in February from 64.1 in January, marking its lowest level since last October, though it remained firmly in positive territory. The ANZ Activity Outlook edged up slightly to 52.6 from 51.6. Meanwhile, inflation expectations climbed to 2.93% from 2.77%, the highest reading since April 2024.
Reserve Bank of New Zealand (RBNZ) Governor Anna Breman said last week that while the path back to 2% inflation has been uneven, inflation is expected to return to the target range in the first quarter of this year.
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.
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