Against the backdrop of a weak US dollar, NZD/USD maintains strong rebound momentum and has continued to rise since April 9th, currently trading around 0.6000. The escalating trade concerns and domestic political uncertainty in the United States are gradually suppressing the popularity of the US dollar.

According to market research, "the US dollar is facing multiple blows, from questioning the independence of the Federal Reserve to the Trump administration's renewed emphasis on trade protectionism, all of which are driving investors towards other currencies

Rising political risks in the United States, suppressing the attractiveness of the US dollar

Investor sentiment remains fragile, mainly affected by the global trade negotiation deadlock. Trump's proposal to investigate key mineral imports has raised concerns about rising inflation and economic slowdown in the United States. In addition, the White House has imposed port tariffs on ships from major Asian countries, putting global shipping at risk of disruption.

Trump's repeated public criticism of Federal Reserve Chairman Powell has also intensified market concerns about central bank independence. Trump claims that if the Federal Reserve does not cut interest rates soon, the US economy may fall into a serious downturn.

New Zealand's trade performance is strong, but the prospect of RBNZ interest rate cuts may limit the upward trend

In terms of fundamentals, New Zealand's exports increased by 19% year-on-year and imports increased by 12% in March, achieving a trade surplus of NZD 970 million, the highest since 2020. This strong data provides short-term support for demand for the New Zealand dollar.

However, the market generally expects the Reserve Bank of New Zealand to cut interest rates by 25 basis points at its May meeting, with a cumulative rate cut of 2.75% by the end of the year. This means that although the current New Zealand dollar benefits from the weakness of the US dollar, its upward potential may be limited in the context of narrowing interest rate differentials.

Economist David Sheppard said, "Trade data is encouraging, but in the context of a global economic slowdown, domestic interest rate adjustments in New Zealand may become a key variable limiting further strength of the New Zealand dollar

Editor's viewpoint:

The current strong trend of the New Zealand dollar against the US dollar is mainly attributed to the systemic weakness of the US dollar itself, rather than a comprehensive improvement in the fundamentals of the New Zealand dollar. Although New Zealand trade data provides some support, the market's expectation that RBNZ will soon launch a new round of easing cycle may suppress the rise of the New Zealand dollar in the medium to long term.

In the short term, if the New Zealand dollar successfully stabilizes at 0.6000 and stabilizes within the upward channel, there is still a chance to test the 0.6070 or even 0.6100 region, but it is necessary to closely monitor the RBNZ policy statement in May and changes in the global trade situation.