Forecasts for NZD to USD
The New Zealand dollar (NZD) has recently shown resilience, climbing to near 90-day highs of approximately 0.6044 against the US dollar (USD), representing a significant increase of 3.2% above its three-month average of 0.5857. Analysts attribute this upward movement to a prevailing risk-on sentiment in the markets, which has provided support for the ‘kiwi’. Despite a lack of substantial domestic economic data from New Zealand, the NZD benefits from an overall improvement in market mood.
However, the outlook remains tempered by external factors. The potential re-election of U.S. President Donald Trump could lead to renewed tariffs on key trading partners, including New Zealand, which might dampen demand for New Zealand's commodities. This could ultimately exert downward pressure on the NZD going forward.
In contrast, the USD has recently slipped, fueled by an unexpected rise in initial jobless claims in the U.S., marking the highest levels since early October. This trend reflects a cooling labor market and has led to speculation that the Federal Reserve may soon adopt a more dovish stance, potentially cutting interest rates to stimulate the economy. Experts suggest that if upcoming non-farm payroll figures indicate a slowdown in job creation, the dollar may face further weaknesses, impacting its position against currencies like the NZD.
The NZD/USD pair also benefits from the correlation with the Australian dollar (AUD), as both currencies are influenced by their geographical proximity and shared dependencies on commodity markets. With the USD as the world's dominant reserve currency, its future movements will heavily depend on U.S. economic data, inflation trends, and Federal Reserve policies. Geopolitical uncertainties, particularly concerning trade dynamics and global crises, will continue to play a critical role in determining the strength of the USD.
Overall, while the NZD has recently performed well, its trajectory will be closely tied to external factors, including U.S. monetary policy shifts and global economic conditions. Market participants should remain vigilant as both the NZD and USD navigate these evolving dynamics.