NZD falls against USD as Trump tariffs take effect
Daily Currency Update
The New Zealand dollar has been in range for the past few days, briefly touching US$0.5684, before drifting lower and closing the week around US$0.5630. Markets have been awaiting the tariffs to come into effect and as a result, volatility ensued. The NZD/USD has opened significantly lower this morning, trading at US$0.5587, close to 1% lower when compared to last week’s close. Continued international trade developments will bring further volatility. The NZD has risen against the CAD at market open, trading at CA$0.8233, compared to last week’s close price of CA$0.8191.Trump's Tariffs have come into effect on Canada and Mexico with a levy of 25% being enforced. Consequently, we are again seeing a tit-for-tat trade war with Canada retaliating with counter-tariffs being placed on US$107B worth of goods from the US. Targeted industries are steel, aluminium and cars. However, the first tranche of tariffs will be aimed at orange juice, peanut butter, wine, coffee, motorcycles and cosmetics, totalling about CA$30B worth of goods.
Mexico’s President, Sheinbaum, has responded to the tariffs by ordering a plan B which may include retaliatory tariffs as well as non-tariff measures. Sheinbaum has called for greater dialogue and cooperation on drug trafficking as was with the case with deportation, rather than escalating with tariffs. Mexico’s main export partner is the US, with 80% of goods being sent there. As a result, tariffs would likely implicate Mexico with a significant GDP drop.
Key Movers
Renewed speculation on gold has helped push the gold bullion to an all-time high. However, commodities currencies have not benefited from the elevated prices as traders have stocked up on the yellow metal as a risk measure. Major currencies have dropped against the USD across the board on market open today. The most notable move is the USD/CAD, opening at 1.4740 compared to the close price of 1.4528 last week. Further volatility is expected to rattle the markets.Tariffs of 25% have come into effect on Canada and Mexico, with Canada already having a plan outlined with retaliatory tariff measures. Mexico has also verbalised retaliatory action which include tariff and non-tariff measures.
Expected Ranges
- NZD/USD: 0.5550 - 0.5700 ▼
- NZD/EUR: 0.5400 - 0.5500 ▼
- GBP/NZD: 2.1850 - 2.2200 ▲
- NZD/AUD: 0.9020 - 0.9150 ▲
- NZD/CAD: 0.8050 - 0.8300 ▲