NZD buoyed by a delay in US tariff plan
Daily Currency Update
The New Zealand dollar rebounded through trade on Tuesday, buoyed by a recovery in risk sentiment. News that President Trump will delay the implementation of tariffs on Mexico and Canada by a month helped fuel a renewed run in risk appetite, despite tensions escalating with China. The postponement bolstered hopes that tariffs may be a bargaining tool for Trump and the new administration rather than a blunt tool and final objective. After sliding below US$0.56 and touching US$0.5590 the NZD has recovered to trade back above US$0.5650, fully reversing Monday’s move.With little of note on the domestic ticket today our attentions remain with US trade policy. Chinese markets will reopen after Lunar New Year celebrations and we are keenly attuned to where officials set the value of the yuan and how both administrations respond after opening salvos have been fired. The NZD remains hypersensitive to changes in the tariff and risk narrative and we expect further volatility in the days ahead.
Key Movers
The US dollar weakened against all major currencies Tuesday with DXY index slipping back below Friday’s close as markets responded positively to news the new administration will delay implementing a 25% tariff on Mexican and Canadian imports. While a 10% trade tariff has still been marked against China's exports the opening of discussion and negotiations have bolstered hopes that tariffs will be used primarily as a bargaining tool rather than a final objective. President Trump has already adopted a more conciliatory rhetoric, suggesting an openness to removing tariffs, upon striking a new trade deal with China. The shift in language helped fuel commodity-led currencies like the AUD and NZD while the CNH edged back below 7.29. China returns from Lunar New Year festivities today, thus we are keenly attuned to evolutions in the trade/tariff narrative.Expected Ranges
- NZD/USD: 0.5580 - 0.5700 ▲
- NZD/EUR: 0.5400 - 0.5500 ▲
- GBP/NZD: 2.1800 - 2.2200 ▼
- NZD/AUD: 0.9000 - 0.9100 ▼
- NZD/CAD: 0.8050 - 0.8200 ▼