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Forex News

News source: FXStreet
Sep 17, 06:46 HKT
0.2%: New Zealand’s Gross Domestic Product grows more than expected in Q2

New Zealand's Gross Domestic Product (GDP) grew by 0.2% QoQ in the second quarter (Q2) of 2026, compared with a 0.9% expansion in the first quarter (revised from 0.8%), Statistics New Zealand showed on Thursday. This reading came in stronger than the expectation of a rise of 0.1%.

The second-quarter GDP expanded by 2.6% YoY, compared with a rise of 1.7% in Q1 (revised from 1.5%), while beating the estimation of a 2.3% growth.

Market reaction to New Zealand’s GDP data

New Zealand Dollar attracts some buyers following the upbeat GDP data. At the time of writing, the NZD/USD pair is down 0.53% on the day at 0.5725.

GDP FAQs

A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.

Sep 17, 06:19 HKT
The Pound drops below its long-run average as the Fed's rate passes Britain's
  • GBP/USD breaks 1.3400 and its 200-day average as the Fed raises rates.
  • Bank of England votes Thursday at 11:00 GMT, forecast six to hold, three to raise.
  • Fed expects unemployment to stay at 4.1% through 2029, under its 4.2% normal.

The Fed raised rates by a quarter point to 3.75-4.00% on Wednesday, the first hike since 2023, and the vote was 12-0. The middle of the new range is 3.875%, which puts US rates above the UK's 3.75% for the first time this year. GBP/USD has been down every session since September 10, Wednesday's drop was the largest of them by a distance, and the pair is trading just under 1.3400, under its 200-day average, which it hasn't been below since early August. The Bank of England meets on Thursday at 11:00 GMT.

The gap is small, and the Fed says it's going to get bigger

The UK's Bank Rate, which is what the Bank of England calls its main interest rate, has been 3.75% since December 2025, and the Bank has held it at every meeting since. The difference between the two rates is only an eighth of a point, but it's now the wrong way round for the Pound, and the Fed's forecasts say it widens from here. The committee expects its rate to be 4.1% at the end of this year and still 4.1% at the end of 2027. It also expects unemployment to stay at 4.1% through 2029, below the 4.2% it thinks of as normal. The Fed doesn't see a reason to stop for at least a year, and that's the gap the Pound is trading against.

Thursday's vote matters more than Thursday's rate

The Bank of England is expected to hold at 3.75% on Thursday, with the vote forecast at six to hold and three to raise, the same as July, when the three, Chief Economist Pill and external members Greene and Mann, wanted to go to 4% straight away. Almost nobody expects the rate to move, so what matters is how the vote splits. UK inflation came in at 3.1% in August, exactly as forecast, and the increase was mostly motor fuel, which a rate rise can't do anything about. That's the argument for the six. Factory gate prices rose 0.7% against a 0.3% forecast, and that's the argument for the three. If a fourth member joins them, the Pound's rate advantage starts coming back into view. The three lost in July, and the rematch was already on the calendar before the Fed moved. UK retail sales follow on Friday at 06:00 GMT, forecast to fall 0.2% after a 0.5% drop in July.

Levels and bias

Resistance: 1.3400, which the Pound traded through on Wednesday, then the 200-day Exponential Moving Average (EMA) just under 1.3450, then 1.3500, where the rally on the inflation release ended.

Support: Wednesday's low just above 1.3350, then 1.3300, the base the pair left in early August.

Bias: Bearish below 1.3400. The first objective is 1.3350 and the second is 1.3300. On the daily chart the Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, is at 16 and has been flat there for a few days, so the selling is stretched and a bounce back to 1.3400 wouldn't change that. The bearish case is wrong if the Pound has a daily close above 1.3450.


GBP/USD daily chart

Pound Sterling FAQs

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Sep 17, 06:01 HKT
The Euro's losing streak runs on as the Fed matches the ECB's rate hike
  • EUR/USD has fallen every session since the ECB raised rates on September 10.
  • Fed's projections push the return to 2% inflation out to 2029.
  • Eurozone final August inflation due Thursday at 09:00 GMT, core forecast 2.4%.

The European Central Bank (ECB) raised its deposit rate to 2.50% on September 10, and the Euro has fallen every session since. The Fed raised its own rate to 3.75-4.00% on Wednesday, by the same quarter point, and the day's drop was the biggest of the run. EUR/USD is trading just above 1.1450, under both of its long-run averages, where it hasn't been since early August, and below where it was before the mid-August jump that started the last rally.

The ECB raised rates to fight inflation and its currency fell for a week

Both central banks moved a quarter point inside seven days, so the gap between the Fed's 3.875% midpoint and the ECB's 2.50% is 1.375 points, exactly what it was before either meeting. What the Fed added on Wednesday was a forecast that has US inflation not back at 2% until 2029. The ECB's own forecast has eurozone inflation at 2.5% next year. Two central banks above target for years to come, and the one paying 1.375 points less has had its currency sold every day since it tightened. Fed Chair Warsh added that the summer's inflation figures hadn't shown him any improvement, which is about as far from a signal to stop as a central banker gets.

Thursday's inflation number is a confirmation, not a release

Eurozone inflation for August is due on Thursday at 09:00 GMT, but it's the final estimate, with the core rate forecast at 2.4%, the same as the flash. Confirmations don't usually move currencies. ECB Chief Economist Lane speaks the same day at 07:00 GMT and the next ECB meeting is October 29, six weeks away, so the Euro's own central bank has nothing scheduled that could change its rate. The daily momentum gauge is at 15, its lowest since June, which is stretched enough that a bounce is likely at some point. Given the size of the last two sessions, the bounce would have to reach 1.1500 to count as anything more than a pause.

Levels and bias

Resistance: 1.1500, then the 50-day Exponential Moving Average (EMA) near 1.1550, which the pair went through on Wednesday, then 1.1600.

Support: Wednesday's low just above 1.1450, then 1.1400, then the early-August base near 1.1350.

Bias: Bearish below 1.1500. The first objective is 1.1400 and the second is the early-August base near 1.1350. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, shows 15 and has been falling for two weeks, so the move is stretched and a bounce to 1.1500 wouldn't change that. A daily close above 1.1600 ends the bearish case.


EUR/USD daily chart

Euro FAQs

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Sep 17, 05:18 HKT
The Japanese Yen gives back more of its rally as the Fed raises rates
  • USD/JPY is up three sessions running and has recovered half of its September drop.
  • Bank of Japan decides Friday, with a hike to 1.25% priced at 100%.
  • Japan's national inflation figures for August are out Thursday at 23:30 GMT.

The Bank of Japan meets on Friday, and the market has a quarter-point hike to 1.25% priced at 100%. The Yen has been falling anyway. USD/JPY is up three sessions in a row, Wednesday's gain was the biggest of the three, and the pair is trading just under 156.50 after the Fed's hike to 3.75-4.00%. That puts it roughly halfway back from the September low near 153.00 to where it started the month near 160.00.

Both central banks are raising and the gap barely moves

Japan's policy rate is 1%, the highest since 1995, and Friday's expected move takes it to 1.25%. The Fed's midpoint is now 3.875%. So after both moves the gap between the two is about two and five-eighths points, and it was about two and five-eighths points before either of them did anything. The market has the BoJ at 1.48% by December and 1.85% by the middle of 2027, while the Fed's forecasts have its rate at 4.1% at the end of 2027 with no cuts before then. Two quarter-point hikes in the same week do nothing to a gap that size, which is why a Yen that rallied about 4% in the first half of September on hike expectations has given more than half of it back since.

Thursday's inflation figures set up Friday's press conference

Japan's national consumer prices for August are due on Thursday at 23:30 GMT, with the measure excluding fresh food forecast at 1.8%, the same as July. That's below the BoJ's 2% target and it's the number BoJ Governor Ueda will be asked about on Friday, since a bank raising rates with inflation under target has some explaining to do. The BoJ decision has no fixed time on Friday and the press conference is at 06:30 GMT. Wholesale prices rose 7.6% in the year to August, which is the BoJ's argument that consumer inflation is coming. Momentum on the daily chart has turned up from its September low but is still in the lower third of its range, so the rebound is early rather than stretched. The Fed's part is done. From here the pair moves on what the BoJ says about December.

Levels and bias

Resistance: 156.50, just above Wednesday's high, then the 200-day Exponential Moving Average (EMA) just under 157.50, then 158.00, the bottom of the range the pair was in through late August.

Support: 155.00, near Wednesday's low, then 154.00, then the September low near 153.00.

Bias: Bullish above 155.00. The first objective is the 200-day EMA just under 157.50 and the second is 158.00. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, is at 26 and rising, so the rebound has room. If the pair has a daily close below 154.00, the bullish case is over.


USD/JPY daily chart

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Sep 17, 05:14 HKT
New Zealand GDP in the barrel with the Kiwi at July lows
  • NZD/USD slides to its lowest since early July with New Zealand GDP just around the bend.
  • Second-quarter growth is forecast at 0.1%, down from 0.8% in the first quarter.

New Zealand reports second-quarter growth later on Wednesday, or early on Thursday depending on where you are relative to the international date line, and the forecast is 0.1% for the quarter, down from 0.8% in the first three months of the year.



The annual figure is forecast to go the other way, to 2.3% from 1.5%, because the quarters it is measured against were weaker than the ones replacing them. So the same release will show growth stalling and growth picking up by most of a point, and both readings will be correct.

The growth figure reaches NZD/USD through the Reserve Bank of New Zealand (RBNZ), which took the Official Cash Rate (OCR) to 2.75% on September 2 with inflation at 4.1% and called the economy recovering. This is the first hard number behind that. The Fed raised its own rate to 3.75%-4.00% on Wednesday and pointed to another increase, which already leaves US rates more than a point above New Zealand's.

NZD/USD trades just above 0.5700, its lowest since early July, with the session high short of 0.5800. The slide runs from the late-August high just under 0.6000 and has been a series of lower highs since. The pair sits below both its 50-day and 200-day Exponential Moving Averages (EMA), which have converged near 0.5850 and which it has not traded above since early September.

The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, is at the bottom of its band, where it last sat during the June sell-off that took the pair to just above 0.5600.


NZD/USD daily chart

GDP FAQs

A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.

Sep 17, 05:04 HKT
Trump demands 1% rates hours after the Fed raised them
  • Trump posts that US rates should be 1% or less, hours after the Fed hiked.
  • DXY holds above 100.00, with its session high already in before he posted.

Trump posted on Wednesday that US rates should be 1% or less and that the country has the strongest credit anywhere. He also wrote that cutting off trade with every nation the US runs a deficit with would earn at least $1.5 trillion a year. The Fed had set its own rate at 3.75%-4.00% a few hours earlier, which leaves 1% twelve quarter-point cuts away. He called the deficit a loss, and it is the part of the post that reaches the Dollar Index.

Americans bought roughly $743 billion more from abroad than they sold in the twelve months to June, and that gap is how foreigners end up with the Dollars they lend back to the US Treasury. Shutting it would remove buyers from the market that sets the borrowing costs he wants lower.

The last agency to rate US debt at the top gave that up in May 2025.

The Dollar Index had not traded above 100.00 all session before the decision, with its low near 99.50 in the European morning. It cleared 100.00 within half an hour of the release and carried on to a high short of 100.50, above everything it traded before the Fed. It holds just beneath that high.

The Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, ran to the top of its band on the break, dropped to the bottom while price stayed near the high, and has turned up again. The high was in before the post, and the index has not moved since.


DXY 5-minute chart

Interest rates FAQs

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

Sep 17, 05:01 HKT
New Zealand Dollar sinks toward its July low after the Fed hikes
  • NZD/USD has fallen every session for more than a week and is just above 0.5700.
  • New Zealand Q2 GDP due Wednesday at 22:45 GMT, forecast at 0.1% against 0.8%.
  • Daily momentum gauge at 8, the lowest reading since July.

NZD/USD has dropped in six straight sessions. The run started near 0.5900 on September 8, went through both long-run averages near 0.5850 early in the run, and the last three sessions have been the biggest of the lot. The pair is trading just above 0.5700 after Wednesday's Fed hike to 3.75-4.00%, and the July low near 0.5625 is the next level of any note below. The daily momentum gauge is at 8, which is as low as it has been since July.

A central bank that raised twice and a currency that fell anyway

The Reserve Bank of New Zealand (RBNZ) raised its cash rate to 2.75% on September 2, its second increase since July, because inflation hit 4.1% in the second quarter on fuel prices. It also said the next move is probably a pause in October and another rise in December. That's a central bank going the same direction as the Fed, just from a lower starting point, and the gap between 2.75% and the Fed's new 3.875% midpoint is more than a point. The Fed's own forecasts don't help either: they raised the US growth outlook for this year and next and took every cut out of 2027. The Kiwi is a currency that rises when investors want risk, and on a day the Fed said US growth is strong and rates are staying high, they didn't.

The number that explains the selling comes out after the selling

New Zealand's second-quarter GDP is due on Wednesday at 22:45 GMT, and the forecast is 0.1% growth on the quarter after 0.8% in the first quarter, which would be a stall. It's also the kind of number that determines whether the RBNZ's December hike stays on the table, so a miss pushes it further out and a beat brings it back in. Trade figures follow on Thursday at 22:45 GMT. The pair has fallen for six sessions into a number that could justify the whole move, which is the market pricing a slowdown before the statisticians confirm it. With momentum this stretched, the reaction to a beat would be sharper than the reaction to a miss.

Levels and bias

Resistance: 0.5750, then just under 0.5800, then the 50-day Exponential Moving Average (EMA) near 0.5850, which the pair went through early in the run and has not been back to.

Support: 0.5700, which Wednesday's low came within a few pips of, then the July low just above 0.5600.

Bias: Bearish below 0.5750. The first objective is 0.5700 and the second is the July low just above 0.5600. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, reads 8, deep in oversold territory, so a bounce toward 0.5750 is likely at some point and wouldn't change the picture. The bearish case fails on a daily close above 0.5800.


NZD/USD daily chart

New Zealand Dollar FAQs

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

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