The NZD/USD currency pair extended its upward momentum for the second consecutive day on Wednesday, climbing to a fresh weekly high near the 0.5720-0.5725 region during the Asian session.
A generally upbeat sentiment in global equity markets, coupled with optimism surrounding China’s economic outlook, has been a driving force behind the gains of antipodean currencies, particularly the New Zealand Dollar (NZD). On Tuesday, data revealed that China’s manufacturing sector expanded at its fastest pace in a year during March. This followed Monday’s better-than-expected official purchasing managers’ index (PMI) figures and the recent stimulus measures aimed at bolstering economic recovery. Together with a subdued US Dollar (USD), these factors have provided significant support for the NZD/USD pair.
Investor expectations are growing that a slowdown in US economic growth, driven by tariffs, could prompt the Federal Reserve (Fed) to resume its rate-cutting cycle sooner than anticipated. Market pricing now suggests the possibility of 80 basis points in rate cuts by the end of the year. Meanwhile, the safe-haven USD has struggled to attract substantial buying interest, as equity markets in Asia have maintained stable performance.
However, concerns about US President Donald Trump’s upcoming announcement of reciprocal tariffs could temper enthusiasm for the export-reliant NZD. Additionally, expectations that the Reserve Bank of New Zealand (RBNZ) may reduce borrowing costs at least twice before the year’s end could also limit further NZD/USD gains. The recent breakdown below a one-week-old trading range has added a layer of caution to traders’ outlooks.
Looking ahead, market participants are awaiting the release of the US ADP report on private-sector employment for potential market movement. However, the primary focus remains on Trump’s anticipated tariff announcement, which could heavily influence market sentiment in the coming hours.
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