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Forex News

News source: FXStreet
Jan 22, 16:46 HKT
Norges Bank seen steady as inflation holds above 3% – ING

Norway’s central bank is expected to keep policy guidance broadly unchanged, with core inflation still above 3% limiting the scope for a dovish shift, ING's FX analyst Francesco Pesole notes.

NOK supported as rate-cut expectations stay limited

"In the rest of Europe, Norway’s central bank announces policy this morning. We don’t expect any major surprises. The December inflation report showed another small rebound in both headline (3.2%) and core (3.1%). We still think the second matters the most for Norges Bank, and that any dovish turn remains contingent on a decline below 3.0%."

"The Bank may well stick to its projection for only one cut this year for this meeting, underpinning NOK’s good performance since the start of the year. We continue to see more upside for NOK over the short term and overvalued SEK in the coming weeks. EUR/NOK could test 11.50 soon."

Jan 22, 16:43 HKT
China: Stimulus front-loaded but not oversized – Standard Chartered

China’s policy makers recently announced a number of stimulus programs, front-loading support. Both monetary and fiscal support remain measured and targeted, aligned with long-term policy priorities. Plans indicate boosting investment is viewed as equally important as supporting consumption in 2026, Standard Chartered's economists Carol Liao and Moriarty Lam report.

A head-start to 2026

"Policy makers have announced various supportive measures since the start of 2026. These stimulus programs are front-loaded and fiscal funding is pre-allocated, likely to counter the weakening domestic demand trend as of end-2025. Details such as key targets, budget and further policies may be announced only at the March NPC." 

"The stimulus measures appear to emphasize optimization, including enhancing their effectiveness, preventing misuse and supporting areas aligned with long-term priorities. This is consistent with our view that China’s stimulus may not expand this year as the country exits ‘tariff emergency mode.’ Rather, stimulus may continue to be targeted at supporting the desired long-term economic transition. Alongside this, the PBoC's recent relending rate cut, along with the Ministry of Finance’s (MoF’s) interest subsidy program, should help reduce borrowing costs for selected consumer, SME, innovation and decarbonization sectors, as well as for equipment upgrades. The central bank has noted that 'there is still room for a rate and RRR cut'. We see a low probability of a near-term universal policy rate cut, but still project a modest 10bps policy rate cut and a more cautious fiscal budget deficit target for 2026."

"Although supporting consumption remains the long-term priority, stabilizing investment is equally important in 2026. Recent official statements note that domestic demand needs support from both investment and consumption, and supply and demand should be mutually reinforcing. As investment fell sharply in late-2025, we expect fiscal resources to tilt more towards infrastructure and manufacturing capex this year."

Jan 22, 16:40 HKT
EUR/USD slips below 1.170 as Dollar regains traction – ING

EUR/USD has fallen back below 1.170, driven largely by renewed dollar strength as geopolitical tariff risks ease and USD bulls re-emerge, ING's FX analyst Francesco Pesole notes.

EUR/USD risks extend toward 1.1600

"EUR/USD has slipped back below 1.170 in line with our call. The pair continues to be almost entirely driven by USD moves and the unwinding of tariff risk on the back of a framework Greenland deal, which is proving enough to revive some dollar bulls. The USD downside risks haven’t all disappeared, but further abating of geopolitical tariff risk can favour another gentle leg lower in EUR/USD."

"We still see risks extending to 1.1600 in the short term for EUR/USD. Today appears to be a better opportunity for a move lower in the pair than tomorrow, when eurozone PMIs are released and can fit the narrative of an improved eurozone macro outlook."

Jan 22, 16:39 HKT
EUR/CAD holds losses near 1.6150 despite lower Oil prices, easing US-EU tensions
  • EUR/CAD may rise as the commodity-linked Canadian Dollar could struggle amid lower Oil prices.
  • WTI struggles as oversupply concerns offset risks, with the IEA warning global supply will exceed demand this year.
  • The Euro may strengthen as tariff war fears ease after Trump signaled stepping back from tariffs on Europe.

EUR/CAD remains in the negative territory after registering modest losses in the previous session, trading around 1.6160 during the European hours on Thursday. The downside of the currency cross could be capped as the commodity-linked Canadian Dollar (CAD) may face challenges on lower Oil prices, given Canada’s status as the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) Oil price edges lower after four days of gains, trading around $60.40 per barrel at the time of writing. Oil prices struggle as supply risks are levelled by oversupply concerns, with the International Energy Agency (IEA) reiterating that global supply will significantly exceed demand this year despite a modest upgrade to demand growth. Industry data also showed the United States (US) crude inventories rose by about 3 million barrels last week.

Traders will likely observe Canada’s monthly Retail Sales data due on Friday, with expectations of 1.2% increase in November after 0.2% decline in October. Meanwhile, Retail Sales ex Autos may increase by 1.4%, against the 0.6% decline.

The EUR/CAD cross may gain ground as the Euro (EUR) may gain ground amid easing concerns over the tariff war between the United States (US) and the European Union (EU). US President Donald Trump said he would step back from imposing tariffs on goods from European nations opposing his effort to take possession of Greenland.

President Trump also noted that the United States and the North Atlantic Treaty Organization (NATO) had “formed the framework of a future deal regarding Greenland.” However, he did not outline the parameters of the so-called framework, and it remained unclear what the agreement would entail.

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

Jan 22, 16:21 HKT
EUR/USD: Likely to consolidate within a range of 1.1655/1.1720 – UOB Group

Euro (EUR) is likely to consolidate within a range of 1.1655/1.1720. In the longer run, risk for EUR remains on the upside; the probability of it breaking above 1.1805 is not high for now, UOB Group's FX analysts Quek Ser Leang and Lee Sue Ann note.

Risk for EUR remains on the upside

24-HOUR VIEW: "Following the strong surge in USD on Tuesday, we indicated yesterday that 'the sharp rise seems excessive, and instead of continuing to rise, EUR is more likely to consolidate today, probably between 1.1690 and 1.1770'. The subsequent price movements did not unfold as expected. During the NY session, EUR rose to 1.1742 and then fell to 1.1676. EUR closed at 1.1682, down by 0.36%. Today, we continue to expect consolidation, but the softer underlying tone suggests a lower range of 1.1655/1.1720."

1-3 WEEKS VIEW: "We stated yesterday that 'while the sharp rally seems overextended, there is scope for EUR to continue to rise'. However, we pointed out that 'the probability of it breaking above 1.1805, near last month’s high, is not high for now'. We also pointed out that 'the risk for EUR remains on the upside, provided that it does not break below 1.1560 (‘strong support’ level)'. We continue to hold the same view, but we are revising the ‘strong support’ level higher to 1.1625."

Jan 22, 15:47 HKT
Forex Today: Mood improves on easing EU-US tensions, eyes on US data

Here is what you need to know on Thursday, January 22:

Market mood improves in the second half of the week as tensions between the United States (US) and the European Union (EU) ease. In the American session, the US Bureau of Economic Analysis will publish a revision to the third-quarter Gross Domestic Product (GDP) data and release the Personal Consumption Expenditure (PCE) Price Index figures for October and November. Additionally, investors will pay close attention to the weekly Initial Jobless Claims data.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.90% -0.60% 0.68% -0.64% -1.98% -2.01% -0.81%
EUR 0.90% 0.31% 1.56% 0.25% -1.10% -1.12% 0.08%
GBP 0.60% -0.31% 1.02% -0.06% -1.40% -1.43% -0.22%
JPY -0.68% -1.56% -1.02% -1.30% -2.61% -2.63% -1.46%
CAD 0.64% -0.25% 0.06% 1.30% -1.31% -1.35% -0.17%
AUD 1.98% 1.10% 1.40% 2.61% 1.31% -0.03% 1.19%
NZD 2.01% 1.12% 1.43% 2.63% 1.35% 0.03% 1.22%
CHF 0.81% -0.08% 0.22% 1.46% 0.17% -1.19% -1.22%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Risk flows returned to markets late Wednesday after US President Donald Trump said that they have agreed on "the framework of a future deal with respect to Greenland" and added that they will not be imposing tariffs on eight European nations that were scheduled to go into effect on February 1. Following Tuesday's sharp decline, Wall Street main indexes gained more than 1% midweek. Early Thursday, US stock index futures trade marginally higher. Meanwhile, the US Dollar (USD) Index stays releativley quiet below 99.00 after snapping a two-day losing streak on Wednesday.

The data from Australia showed early Thursday that the Unemployment Rate declined to 4.1% in December from 4.3% in November. This print came in better than the market expectation of 4.4%. According to the other details of the report, the Employment Change was +65.2K in this period following the 28.7K decrease recorded in November. AUD/USD gathers bullish momentum on the back of upbeat data and trades at its highest level since October 2024 above 0.6800, rising about 0.7% on the day.

EUR/USD stays in a consolidation phase below 1.1700 after losing more than 0.3% on Wednesday. The European Central Bank (ECB) will publish the Monetary Policy Meeting Accounts later in the session and the European Commission will release preliminary Consumer Confidence Index data for January.

GBP/USD moves sideways above 1.3400 in the European session on Thursday following Wednesday's correction.

After struggling to find direction in the first half of the week, USD/JPY gains traction and advances toward 159.00 early Thursday. The Bank of Japan (BoJ) will announce monetary policy decisions in the Asian session on Friday.

Gold retreated from the record-high it set near $4,890 on Wednesday but closed the day in positive territory. Following an extended decline in the Asian session, XAU/USD found support and was last seen trading flat on the day above $4,800.

Inflation FAQs

Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

Jan 22, 15:46 HKT
Silver Price Forecast: XAG/USD rebounds toward $95.00 near record highs
  • Silver price advances toward the record high of $95.89.
  • XAG/USD remains above the rising nine-day EMA, highlighting firm near-term bias.
  • The 14-day 14-day Relative Strength Index at 70.99 signals overbought conditions.

Silver price (XAG/USD) recovers losses from the previous two consecutive days, trading around $94.20 per troy ounce during the European hours on Thursday. The technical analysis of the daily chart timeframe suggests the price of the precious metal remains within an ascending channel pattern, suggesting a persistent bullish bias.

Silver price holds well above the rising nine-day Exponential Moving Average (EMA), underscoring firm near-term momentum. The short-term average’s positive slope keeps the bullish bias intact. The medium-term trend is reinforced by the ascending 50-day EMA, which acts as structural support. While the XAG/USD pair remains above the short- and medium-term averages, setbacks would be corrective.

On the upside, the Silver price could test the record high of $95.89, which was recorded on January 20, 2025, followed by the upper boundary of the ascending channel around $98.50.

The 14-day Relative Strength Index (RSI) at 70.99 is overbought and maintains a risk of consolidation, whereas a moderation would open room for trend extension, with scope for a pause or pullback toward the nine-day EMA at 90.36. A break beneath the short-term average would expose the lower boundary of the ascending channel around $81.10, followed by the 50-day EMA at 72.04.

(The technical analysis of this story was written with the help of an AI tool.)

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

Jan 22, 10:59 HKT
Japanese Yen adds to intraday losses; USD/JPY approaches 159.00 as traders await BoJ
  • Japanese Yen is pressured by receding safe-haven demand and concerns about Japan's fiscal health.
  • A modest USD uptick further supports USD/JPY ahead of the US PCE Price Index and the US GDP.
  • The market focus will remain glued to the outcome of a crucial two-day BoJ policy meeting on Friday.

The Japanese Yen (JPY) extends its steady intraday descent and slide to over a one-week low against its American counterpart during the early European session on Thursday. The global risk sentiment gets a strong lift in reaction to US President Donald Trump's U-turn on Greenland and undermines demand for traditional safe-haven assets, including the JPY. Apart from this, the recent chaotic selloff in Japan's bond markets, led by concerns about expansionary fiscal policy under Prime Minister Sanae Takaichi, is seen weighing on the JPY.

Meanwhile, expectations that Japanese authorities would step in to stem further weakness in the domestic currency might hold back the JPY bears from placing aggressive bets. Furthermore, investors might opt to wait for more cues about the likely timing of the next interest rate hike by the Bank of Japan (BoJ). Hence, the focus will remain on the outcome of a two-day BoJ meeting on Friday and Governor Kazuo Ueda's comments during the post-decision press conference, which would play a key role in influencing the JPY's near-term trajectory.

Japanese Yen bears retain control as easing trade war fears dent safe-haven demand

  • US President Donald Trump pulled back from his threat to slap heavy tariffs on several European countries and said in Davos on Wednesday that he had reached an agreement on a framework for a future deal on Greenland with NATO. The S&P 500 rose sharply in reaction to the latest development, and the spillover effect lifts Asian equities on Thursday.
  • Japan’s bond market suffered a severe selloff on Tuesday amid increasing concerns about the country’s fiscal health on the back of Prime Minister Sanae Takaichi’s fiscally expansionary policies. Adding to this, a tepid response to a 20-year debt auction on Tuesday added to the negative sentiment, pushing yields on long-dated government bonds to record highs.
  • The negative fundamental backdrop for the Japanese Yen, however, is offset by hawkish Bank of Japan expectations. In fact, a Reuters report early this week suggested that some policymakers inside the BoJ see scope to raise interest rates as early as April. Moreover, the recent JPY downfall could add to price pressures and force the BoJ into faster action.
  • In fact, a BoJ survey for December showed on Monday that most Japanese households expect prices to keep rising for the next few years. This comes on top of data released last Friday, which revealed that Japan’s inflation has averaged above the BoJ's 2% target for four straight calendar years, which, in turn, backs the case for further policy tightening.
  • Meanwhile, Japan's Finance Minister Satsuki Katayama last week hinted at the possibility of joint intervention with the US to deal with the recent weakness in the domestic currency. The JPY bulls, however, seem reluctant to place aggressive bets and opt to move to the sidelines ahead of the crucial two-day BoJ policy meeting, starting this Thursday.
  • The BoJ is scheduled to announce its decision on Friday and is expected to maintain the status quo after raising the overnight interest rate to 0.75%, or the highest in 30 years in December. Investors will scrutinize Governor Kazuo Ueda's remarks during the post-decision press conference for cues about the timing of the next rate hike, which will drive the JPY.
  • The US Dollar gains some positive traction as the so-called 'Sell America' trade seems to have receded amid easing trade war fears. This further acts as a tailwind for the USD/JPY pair as investors now look to the release of the US Personal Consumption Expenditure (PCE) Price Index and the final US Q2 GDP growth report for some meaningful impetus.

USD/JPY might now aim to test 18-month peak, around 159.45 amid constructive setup

Chart Analysis USD/JPY

The overnight breakout through the 158.15 confluence – comprising the 100-hour Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the recent pullback from the highest level since July 2024 – favors the USD/JPY bulls. The Moving Average Convergence Divergence (MACD) line stands above the Signal line, with both just over the zero mark, while a contracting histogram suggests momentum is cooling after the recent upswing. The Relative Strength Index (RSI) prints 58, above its midline, reinforcing mild bullish traction.

Meanwhile, the 50% retracement at 158.39 caps the rebound, and a decisive break higher would expose the next resistance at 61.8% Fibonacci retracement, around 158.63. That said, failure to clear the 50% level could see a pullback toward dynamic support at the 100-hour SMA.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

Read more.

Next release: Fri Jan 23, 2026 03:00

Frequency: Irregular

Consensus: 0.75%

Previous: 0.75%

Source: Bank of Japan

Jan 22, 15:20 HKT
NZD/USD rises above 0.5850 as risk aversion eases
  • NZD/USD gains on easing tensions after Trump signaled pausing tariffs on Europe over Greenland.
  • The US Dollar may gain support as expectations grow that the Fed will maintain a cautious policy stance.
  • Traders await Friday’s Q4 CPI to gain the RBNZ’s policy outlook.

NZD/USD extends its winning streak for the fifth consecutive session, trading around 0.5860 during the early European hours on Thursday. The pair gains ground as the New Zealand Dollar (NZD) receives support amid easing risk aversion after US President Donald Trump said he would step back from imposing tariffs on goods from European nations opposing his effort to take possession of Greenland.

However, the upside of the NZD/USD pair could be limited as the US Dollar (USD) could also gain ground from the easing of the tariff war between the United States (US) and the European Union (EU). President Trump also noted that the United States and the North Atlantic Treaty Organization (NATO) had “formed the framework of a future deal regarding Greenland.” However, he did not outline the parameters of the so-called framework, and it remained unclear what the agreement would entail.

Additionally, the Greenback could receive support from rising expectations of cautious sentiment surrounding the Federal Reserve (Fed) policy outlook. Fed officials have indicated limited urgency to ease policy without clearer evidence that inflation is moving sustainably toward the 2% target, even as markets still price in 50 basis points of rate cuts later this year.

Traders await US weekly Initial Jobless Claims, Gross Domestic Product Annualized, and Personal Consumption Expenditures Prices (PCE) inflation data due later in the day for fresh signals in the US economy.

In New Zealand, traders will focus on Friday’s Q4 CPI for insight into the Reserve Bank of New Zealand’s (RBNZ) policy outlook, with annual inflation expected to rise to 3%, the top of its 1–3% target range. An upside surprise could reinforce expectations for higher interest rates.

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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