- 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.
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.
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
EUR/USD holds losses near 1.1350 ahead of ECB policy decision
EUR/USD stays on the back foot near 1.1350 in European session on Thursday. The pair loses ground on the back of a broad US Dollar rebound and as traders turn cutious ahead of the European Central Bank interest rate decision and Lagarde's press conference.
Gold price retreats from record high as profit-taking kicks in
Gold price retreats after touching a fresh all-time peak earlier this Thursday and erodes a part of the previous day's blowout rally though the downside remains cushioned. A slight improvement in the global risk sentiment, bolstered by hopes of US trade negotiations, turns out to be a key factor undermining the precious metal.
GBP/USD stays offered below 1.3250 as US Dollar attempts a bounce
GBP/USD remains under pressure below 1.3250 in Thursday's European trading, snapping its seven-day winning streak. A tepid US Dollar recovery amid risk appetite prompts the pair to pullback from six-month highs of 1.3292 set on Wednesday. Traders look to tariff headlibnes and US data for fresh impetus.
RAY sees double-digit gains as Raydium unveils new Pumpfun competitor
RAY surged 10% on Wednesday as Raydium revealed its new meme coin launchpad, LaunchLab, a potential competitor to Pump.fun — which also recently unveiled its decentralized exchange (DEX) PumpSwap.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.