The strength of the US dollar has been too much for the New Zealand dollar, and that will likely persist for longer. However, the kiwi has reasons to rise when the dust settles – or at least to outperform its peers, in the opinion of FXStreet’s Analyst Yohay Elam.
New Zealand's dependence on dairy products is a positive for the kiwi
“The Reserve Bank of New Zealand (RBNZ) is not sitting on the sidelines – it raised interest rates both in October and then in November. The RBNZ is backed by a robust economy.”
“New Zealand has an advantage over other countries in that it relies on the export of agricultural goods, mostly dairy products. That contrasts Australia's metal resources and Canada's oil. If China imposes more lockdowns due to Omicron or extends the crackdown of its property sector, that would have no impact on its demand for food.”
“Another source of income for New Zealand is its tourism sector. Only recently has the country reopened to some visitors from abroad. If the economy is doing so well without foreign tourists, it could further thrive when they come back.”
“How does the Fed-driven dollar match with New Zealand's upbeat fundamentals? In the short-term, bears will likely remain on top, as King Dollar reigns supreme. They could receive further boosts from Nonfarm Payrolls and later from US inflation data. Later on, the kiwi could claw its way back up. While most economic releases in New Zealand are only quarterly, they tend to have a significant impact.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD favours extra retracements in the short term
AUD/USD kept the negative stance well in place and briefly broke below the key 0.6400 support to clinch a new low for the year on the back of the strong dollar and mixed results from the Chinese docket.
EUR/USD now shifts its attention to 1.0500
The ongoing upward momentum of the Greenback prompted EUR/USD to lose more ground, hitting new lows for 2024 around 1.0600, driven by the significant divergence in monetary policy between the Fed and the ECB.
Gold ascends but remains shy of testing $2,400 amid hawkish Fed remarks
Gold prices edged higher late in North American session, gaining 0.22% following a hawkish tilt by Fed Chair Jerome Powell. Economic data from the United States was mixed, though Monday’s Retail Sales report and Powell’s remarks kept US Treasury yields higher, capping the yellow metal’s advance.
Bitcoin price outlook amid increased demand and speculation pre-halving
Bitcoin price is edging lower as markets count only days to the halving. Nevertheless, the dump has not shaken the faith of large holders as they continue to cling to their holding even after a month of steady dumps.
UK CPI inflation data ahead: Sterling hovering north of key support
Following today's mixed bag of employment and wages data, today’s attention is directed to the March UK CPI inflation release. Both headline and core measures have surprised to the downside in the previous two releases and are expected to demonstrate further evidence of disinflation.