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The NZD/USD pair traded around 0.5900 during the Asian trading session on Thursday. The New Zealand dollar (NZD) strengthened against the US dollar (Greenback) as risk sentiment improved. Later on Thursday, investors will closely watch the US retail sales and producer price index (PPI) for April. In addition, Federal Reserve (Fed) Chairman Jerome Powell will also speak.
Signs of easing in the US-China trade war provided some support to the New Zealand dollar, which is a proxy for China, as China is New Zealand’s main trading partner. The United States and China reached an agreement to temporarily cut reciprocal tariffs, easing concerns about a trade war between the world’s two largest economies. The United States will reduce tariffs on Chinese imports from 145% to 30%, while China will reduce tariffs on US imports from 125% to 10%. The reduced tariff rates will be effective for 90 days.
Top US economic data on Thursday and Fed Powell’s speech may provide some clues about the US economic outlook and interest rate path. Any hawkish comments from Fed officials may boost the US dollar and create resistance for the pair.
San Francisco Federal Reserve Bank President Mary Daly said late Wednesday that the strength of the U.S. economy allows policymakers to be patient and wait for more evidence on how President Donald Trump’s policies will affect businesses and households.
Meanwhile, markets have lowered their expectations for the Fed to cut interest rates this year, pricing in a 74% chance of a first rate cut of at least 25 basis points (bps) at the September meeting, according to LSEG, compared with a previous expectation of a rate cut in July.
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