Commonly termed ‘The Kiwi’, the NZD/USD currency combination is amongst the 10 most listed currencies in the world. Just like the Australian dollar, the New Zealand currency has benefitted over the past few decades from a commodity boom that has seen its worth soar, and the combination currently symbolizes the connection between two of the foremost cogent economies on the world. This has caused the pairing’s quality to rise exponentially in recent years, so much so that the Federal Reserve Bank of recent Zealand was forced to introduce devaluation measures in 2012. Appropriate for everyone from the novice trader to the investment skilled, the NZD/USD combination options in a lot of portfolios round the world.
What are the determinants of the NZD/USD exchange rate?
The New Zealand dollar is very dependent on commodities that makes the NZD/USD pair to be considered a commodity pair. The metal costs have a very important impact on each Australian and New Zealand dollars. In fact there is a robust correlation between these two, and it is enough to look at the graphs to get convinced regarding it.
New Zealand ranks 1st within the world in terms of production of milk powder that is New Zealand is the world’s largest exporter of whole milk powder and if milk prices are on the rise, the New Zealand economy is likely to be doing well, which will in turn push up the currency. Therefore traders are paying close attention to the analysis of trends within the farm market. There are a range of sources that contains current knowledge on farm costs, which can give insights on the current situation of the farm products. As the New-Zealand economy is very dependent on commodity costs, primarily the farm product and metals, any moves within the political economy of world’s largest commodity users, like China, could be crucial for the NZD. Moreover, the New-Zealand housing market is booming since long and therefore to any extent further appreciation by the important estate sector would possibly end up forcing the RBNZ(Reserve Bank of New Zealand) to require fast action. The financial institution recently is in search of implementing numerous measures, together with a rate cut, to safeguard its economy and force additional reliance on inward earnings than to be additional dependent on Exports. In addition, broader risk-sentiment additionally affects the NZD price, whereby the RBNZ’s higher interest-rate propels market players to high yield earning currencies.The GDP, inflation, employment, and different statistics beside market sentiment will positively modify the NZD/USD combination.
Unlike all different currency pairs, the fundal-technical factors poignant the U.S. dollar and therefore the New-Zealand dollar are the most ingredients that would help forecast the NZDUSD rates.
At the U.S. front, being the world’s largest economy, there are many political economy that must be thought-about, together with domestic political economy, international risk-sentiment, Fed moves and agreement, Geo-politics, etc.
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