NZD/USD remains below 0.5700 due to ongoing uncertainty over US trade policies
NZD/USD weakens as the US Dollar gains strength amid persistent uncertainty over US trade policies.
The US Dollar strengthens due to risk-off sentiment and rising US Treasury yields.
ANZ Business Outlook Index climbed to 58.4 in February, signaling increased optimism about New Zealand’s economic recovery.
NZD/USD continues its losing streak for the fifth consecutive day, trading around 0.5680 during the European session on Thursday. The pair weakens as the US Dollar (USD) strengthens amid uncertainty over US trade policies, driven by US President Donald Trump’s vague pledges to impose tariffs on Europe and continued delays on planned levies for Canada and Mexico.
The Greenback strengthens amid increased risk aversion and rising US Treasury yields. The US Dollar Index (DXY), which measures the USD against six major currencies, maintains its position above 106.50, with 2-year and 10-year US Treasury bond yields standing at 4.10% and 4.29%, respectively, at the time of writing.
Federal Reserve Bank of Atlanta President Raphael Bostic stated late Wednesday that the Fed should maintain current interest rates to continue applying downward pressure on inflation, according to Bloomberg. Bostic noted the need for more data to determine if January’s inflation was a temporary bump or the start of a trend. He emphasized that Fed policy remains restrictive and should stay that way.
On Thursday, Lu Lei, Deputy Governor of the People’s Bank of China (PBOC), suggested that the central bank take a more active role in supporting fundraising efforts, including issuing special treasury bonds, to help major state-owned banks bolster their Common Equity Tier 1 (CET1) capital. Any shifts in China’s economy could influence the NZD, given the close trade relationship between China and New Zealand.
In New Zealand, the ANZ Business Outlook Index rose to 58.4 in February 2025, up from January’s five-month low of 54.4. This marks the first increase in four months, reflecting growing optimism about the economy’s recovery, driven by lower interest rates and stronger-than-expected commodity export prices.
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