NZD/USD advances to near 0.6000 ahead of US Initial Jobless Claims data
- NZD/USD appreciates due to renewed optimism over potential US-China trade negotiations.
- The White House is considering cutting tariffs on Chinese imports by up to 50% in a bid for meaningful dialogue.
- The RBNZ is widely expected to deliver a 25 basis point rate cut in its upcoming May meeting.
NZD/USD edges higher after two consecutive sessions of losses, trading near 0.5980 during European hours on Thursday. The pair gains traction as the New Zealand Dollar (NZD) gains amid renewed optimism over potential US-China trade negotiations, with markets drawing support from the close trade ties between China and New Zealand.
According to The Wall Street Journal, the White House is considering cutting tariffs on Chinese imports by up to 50% in a bid to create space for meaningful dialogue. US Treasury Secretary Scott Bessent acknowledged that the current tariff levels—145% on Chinese imports and 125% on US exports—are unsustainable and must be revised to pave the way for constructive talks. However, he made it clear that President Donald Trump will not act alone on the issue.
Trump reiterated that any tariff revisions depend on China’s willingness to negotiate. “If we don't reach a deal, we're simply setting the price—then it’s up to them to decide if they want to proceed,” he said, emphasizing that the 145% tariff rate remains in place due to limited trade activity.
Meanwhile, expectations are rising that the Reserve Bank of New Zealand (RBNZ) will lower its Official Cash Rate (OCR) in its upcoming May meeting. Markets are fully pricing in a 25 basis-point cut from the current 3.5%, with further easing to 2.75% expected by year-end.
Traders now look ahead to key US data releases scheduled for later Thursday, including Initial Jobless Claims, the Chicago Fed National Activity Index, Durable Goods Orders, and Existing Home Sales.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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