NZD in demand despite rising geopolitical tensions
|Despite rising frictions with Iran or an escalation of trade dispute with China, it seems that the kiwi is trading the opposite way. Although a risk-off sentiment dominates the marketplace, with safe-haven in demand, the New Zealand dollar remains in gain territory. Yet the trend is about to reverse, as fundamentals should come back to play. The recent release of April manufacturing PMI at 53 (prior: 51.9), albeit ticking higher, missed forecasts of 54.5 while last week decision from the Reserve Bank of New Zealand to cut the Official Cash Rate at an historical low of 1.50%, even if foreseen, did not push the currency much downward. Furthermore, the decline in 1Q producer prices, similarly to headline CPI, confirms a global weakness of inflation, leaving the RBNZ with no other options but to ease monetary policy and potentially cut its key rate a second time this year if necessary.
NZD/USD currently trades at October 2018 range (-0.95% since RBNZ rate cut announcement). The pair is expected to decline further. Major support at 0.6517 (31/10/2018 low) remains.
Stay on top of the markets with Swissquote’s News & Analysis
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.