The New Zealand dollar has felt the Brunt of US President Donald Trump’s wild policies by falling to a 2 year low earlier in the week against its US counterpart and those losses may be exasperated today if the US president goes ahead with threats he made last week.
The Kiwi currency has been one of the biggest victims in the trade war between the US and China and any further trade tariffs are likely to cause huge problems in the Chinese economy, which will have a major flow over to the New Zealand economy.
China is New Zealand’s biggest trading partner with regards to products such as dairy and other agricultural commodities.
Many believe an announcement on further tariffs is imminent and could come as early as today
Trump "is widely expected to go ahead with additional tariffs, but the devil will be in the detail, such as phasing, and whether he then threatens (again) tariffs on the full US$500-plus billion of Chinese imports," said Bank of New Zealand senior markets strategist Jason Wong
"Against that backdrop, the safe-haven yen and Swiss franc are the best performing currencies." He added.
Markets are also beginning to price in a rate cut from the Reserve Bank of New Zealand, which probably proves the tariffs against China are already starting to affect the local economy and this is also expected to keep the New Zealand dollar under pressure
“A cut is more likely than a hike. Is it time to definitively call cuts? We’re leaning that way but are not over the line yet.” said Sharon Zollner, chief economist at ANZ Bank New Zealand in Auckland.