Home Daily Commentaries NZD underperforms despite improved US/China trade relations

NZD underperforms despite improved US/China trade relations

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Tuesday 13 May, 2025

Daily Currency Update

The New Zealand dollar retreated through trade on Monday, giving up nearly 1% on last week's close, amid broad-based US dollar strength. President Donald Trump repealed tariffs imposed against China, rolling back taxes on exports to the US after a series of positive and robust trade talks over the weekend. Trump announced China would be afforded a 90-day reprieve, removing suffocating tariffs, with the tax on Chinese exports reduced to just 30%, down from 145%. China followed suit, paring back its tariff agenda and reducing its tariff rate to 10%.

Equities and risk assets rallied sharply while the US dollar lurched upward, following a surge in US yields and a paring of Fed rate cut expectations. Having slipped below US$0.59 and US$0.5850, the NZD touched intraday lows at US$0.5847. Having fallen against the USD, the NZD also gave up ground to the AUD while enjoying an uptick against traditional safe havens, advancing against the yen, Swiss franc and euro.

Our attention remains with the US tariff agenda, risk sentiment and US inflation data.

Key Movers

The US dollar advanced through trade on Monday, buoyed by improved US/China trade relations. The DXY index surged 1.5%, pushing back above 102, as the euro and safe-haven currencies underperformed. The euro fell 1.5% below 1.11 to 1.1085, as the yen and Swiss franc underperformed, down 2%. The USD pushed above 148 against the yen, marking session highs at 148.30.

The abrupt adjustment in the US tariff agenda has helped alleviate fears for global growth, as the negative impact on the global economy is reduced. With inflation fears connected to higher tariffs fading, central bank policy expectations have shifted sharply over the last 24 hours. Fed rate cut expectations are down 10 basis points amid a short-end selloff.

Our attention today remains with the US trade narrative while US CPI data headlines the macro ticket. The data should show the early impacts of tariffs, and we expect an uptick in price pressures through the coming months.

Expected Ranges

  • NZD/USD: 0.58 - 0.5950 ▼
  • NZD/EUR: 0.5220 - 0.5320 ▲
  • GBP/NZD: 2.23 - 2.26 ▲
  • NZD/AUD: 0.9150 - 0.9250 ▼
  • NZD/CAD: 0.8120 - 0.8280 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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