As of January 3, 2025, the New Zealand dollar (NZD) has rebounded to approximately 0.5605 against the US dollar (USD), reflecting a 0.26% increase. This recovery comes in the wake of signals from the People's Bank of China (PBoC) indicating potential rate cuts in 2025, which have positively influenced market sentiment [184bfe91].
Despite the recent uptick, the NZD remains under pressure from external economic factors. Former President Trump has threatened to impose new tariffs of 25% on goods from Mexico and Canada, and 10% on imports from China. These tariff threats contribute to ongoing uncertainty in international trade, which could impact the NZD's performance [184bfe91].
Additionally, the Federal Reserve has indicated a cautious approach towards rate cuts, suggesting that it may lower rates only twice more this year. This stance could limit the NZD's potential for a more significant rebound against the USD, especially as the Fed balances domestic economic conditions with global pressures [184bfe91].
The economic landscape in New Zealand continues to be affected by its recent GDP contraction of 1.0% in the third quarter of 2024, following a 1.1% decline in the previous quarter. This has raised concerns about a potential recession and has led to calls for aggressive monetary easing by the Reserve Bank of New Zealand (RBNZ) [43df1a39].
Technical analysis indicates that while the NZD has shown signs of recovery, it may still face challenges ahead, particularly if external pressures from trade policies and domestic economic conditions persist [43df1a39]. As the global economic situation evolves, the interplay between these factors will be crucial in determining the NZD's trajectory moving forward.