FX.co ★ New Zealand Dollar Slightly Higher

The New Zealand dollar appreciated to approximately $0.594 on Tuesday, breaking a two-day downturn, following the announcement from US President Trump to extend the deadline for tariffs on China. Late on Monday, it was reported that the Trump administration decided to delay the implementation of extensive tariffs on China by 90 days, just before the expiration of the previous agreement. In a reciprocal move, China’s Commerce Ministry declared it would also postpone additional tariffs on US goods for the same period. These encouraging trade prospects benefited the New Zealand dollar, often seen as a proxy for the Chinese economy due to China's significant trade relationship with New Zealand. Nevertheless, the currency's gains were limited after Prime Minister Christopher Luxon indicated that relief from US tariffs appears unlikely, subsequent to a recent increase in tariffs on New Zealand exports, which rose to 15% from 10%. This situation poses risks for New Zealand’s export-reliant economy, particularly as the US represents a significant trading partner. In terms of monetary policy, recent data indicating a soft labor market and subdued inflation levels have heightened expectations of a potential interest rate cut by the Reserve Bank in the coming week.