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- NZD/USD loses ground to around 0.5935 in Thursday’s Asian session.
- The renewed trade tensions between the US and China, and a firmer US Dollar weigh on the pair.
- The preliminary reading of the US GDP data will take center stage later on Thursday.
The NZD/USD pair weakens to near 0.5935 during the early Asian trading hours on Thursday bolstered by a firmer US Dollar (USD). The renewed trade tensions between the United States (US) and China weigh on the China-proxy Kiwi.
US President Donald Trump’s administration suspended some sales to China of critical US technologies, including those related to jet engines, semiconductors, and certain chemicals. This action is a response to China’s recent restrictions on exports of critical minerals to the US, a decision by Beijing that has threatened to cripple US company supply chains. Signs of escalating trade tensions between the world’s two largest economies exert some selling pressure on the NZD as China is a major trading partner of New Zealand.
On Wednesday, the Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate (OCR) by 25 basis points to 3.25%, as widely expected. However, the signal that the RBNZ might be nearer to an end of easing than some in the market had hoped for might help limit the Kiwi’s losses. Markets scaled back the possibility of an RBNZ rate cut at the next meeting in July to around 36%, from 60% previously.
On the Greenback’s front, Reuters reported early Thursday that a US federal court blocked US President Donald Trump’s “Liberation Day” tariffs from going into effect. A federal trade court ruled Trump didn’t have the authority to impose across-the-board duties on imports from nations that sell more to the US than they buy. The USD strengthens broadly following the report.
Traders will closely monitor the preliminary reading of the US Gross Domestic Product (GDP) report for the first quarter (Q1), which will be released later on Thursday. If the report shows weaker-than-expected outcomes, this could undermine the Greenback and act as a tailwind for the pair.
