Home Daily Commentaries NZD/USD falls amid Trump’s tariff tensions

NZD/USD falls amid Trump’s tariff tensions

Daily Currency Update

The NZD/USD pair extends its decline for the second consecutive session, trading near US$0.5660 in early European trading on Tuesday, as renewed tariff threats from US President Donald Trump weigh on market sentiment. Market participants are bracing for the Federal Reserve’s upcoming policy decision today, with expectations leaning heavily toward the central bank maintaining its benchmark interest rate unchanged. However, uncertainty lingers regarding the Fed’s longer-term stance, particularly in light of Trump’s persistent calls for immediate rate cuts.

On the New Zealand front, the Kiwi faces additional pressure amid growing expectations of a dovish policy shift by the Reserve Bank of New Zealand (RBNZ). Swaps markets are currently pricing in a nearly 90% probability of a 50-basis point rate cut at the February 19 meeting, following two earlier reductions in the current cycle.

Key Movers

The US Dollar index (DXY) climbed to a two-day high, surpassing the 108.00 threshold, as renewed demand for the Greenback fueled its upward momentum. Market attention is now firmly focused on the upcoming FOMC meeting, which is expected to dominate the week's economic agenda. Additional data releases, including Wholesale Inventories, advanced Goods Trade Balance, and weekly Mortgage Applications will also be closely monitored for further insights into the US economic landscape. The euro retreated to two-day lows, testing the critical US$1.0400 support level of the back of US strength. Germany’s Consumer Confidence report is set to be released, soon followed by the ECB’s M3 Money Supply data. Meanwhile, the British pound mirrored the downward trend of its risk-sensitive counterparts, sliding to weekly lows near the US$1.2400 mark amid the Greenback’s robust rebound. Market watches await Bank of England Governor Andrew Bailey’s scheduled speech. The Japanese yen failed to hold on to its 3-day winning streak and since experienced a -0.65% loss on the day. Market participants will now focus on the release of the Bank of Japan’s meeting minutes and the Consumer Confidence index, which are expected to offer fresh cues on Japan’s economic outlook.

Expected Ranges

  • NZD/USD: 0.5650 - 0.5690 ▼
  • NZD/EUR: 0.5415 - 0.5435 ▲
  • GBP/NZD: 2.1935 - 2.2015 ▲
  • NZD/AUD: 0.9035 - 0.9065 ▲
  • NZD/CAD: 0.8130 - 0.8180 ▼

Written by

Michael Sorial

OFXpert

At OFX, Michael manages a diverse portfolio of clients, offering currency risk management strategies. Possessing a nuanced understanding of market dynamics, Michael takes immense pride in fostering authentic client relationships, steering them towards optimal outcomes in their foreign exchange transactions, while diligently identifying opportunities for cost savings.