FX.co ★ New Zealand Dollar Extends Gains

The New Zealand dollar advanced beyond $0.60 on Wednesday, marking a fourth successive day of gains. This upward trend followed President Donald Trump's announcement of a trade agreement with Japan, alleviating concerns over the ongoing tariff conflict. The deal entails a 15% tariff on imported Japanese goods, reduced from an initially proposed 25%, while Japan commits to investing $550 billion in the United States. Nationally, recent data indicated that New Zealand's annual inflation climbed to its highest level in a year during the second quarter, though it fell slightly short of predictions. Additionally, the trade surplus contracted significantly in June, bolstering expectations of an interest rate cut in the coming month. Current market sentiment prices in an 80% likelihood of a 25 basis point reduction in August, despite investor speculation that this may signal the conclusion of the easing cycle. Notably, market participants will keenly observe the upcoming address by RBNZ Chief Economist Paul Conway on Thursday regarding the economic ramifications of tariffs, which could shed light on the probability of an August rate cut.