Kiwi extends losses to two-week trough on tariff concerns

The New Zealand dollar fell in Asian trade on Thursday on track for the fifth loss in a row against the US dollar, hitting two-week lows on risk aversion and due to concerns about Trump’s tariffs. 

US President Donald Trump continues to threaten tariffs on major economies worldwide in a step aimed at reducing the US trade deficit, which paves the way for a global trade war.

The Price

The NZD/USD fell 0.4% today to $0.5675, the lowest since February 14, with a session-high at $0.5701.

The kiwi closed down 0.55% on Wednesday against the greenback amid mounting risk aversion while global stocks tumbled.

Trump’s Tariffs

President Trump revealed plans to potentially delay the implementation of 25% tariffs on Canadian and Mexican imports from March 4 to April 2.

However, White House officials asserted the tariffs are still firmly in place as Trump is ensuring that Mexico and Canada are bolstering their borders and stemming the tide of immigrants and fentanyl to the US.

Trump also spoke about a 25% additional tax on European imports, including cars, in order to reduce the giant trade deficit with the EU.

Investors are concerned about the impact on the global economy from Trump’s aggressive tariffs and their repercussions with retaliatory tariffs taken by other sides. 

The New Zealand economy heavily relies on exporting commodities such as meat and dairy, making the economy indirectly exposed to Trump’s tariff waves on countries such as China and the EU.

New Zealand Rates

The odds of a New Zealand 0.25% interest rate cut at the April 9 meeting stood at just 93%, while rate futures indicating that rates will likely hit 3% by the end of the year.

Now investors await important data on New Zealand’s inflation, wages, unemployment in upcoming weeks to gather more clues.