NZD/USD Steady Above 0.6050 on US-China Trade Optimism and Fed Worries

NZD/USD Holds Firm Above 0.6050 Amid Fed Concerns and US-China Trade Progress

The New Zealand Dollar (NZD) continued to show strength against the US Dollar (USD) on Friday, with NZD/USD holding above the 0.6050 level and trading around 0.6070 during the European session. This marks the fifth straight session of gains for the pair.

US-China Trade Talks Boost Kiwi Sentiment

Positive developments in US-China trade talks have sparked investor optimism. China's Commerce Ministry confirmed on Friday that discussions in London clarified the trade framework. As a result, China will issue export permits for controlled goods, prompting the US to roll back some restrictive measures.

Given the close economic ties between New Zealand and China, positive news out of Beijing often fuels demand for the Kiwi Dollar.

China’s policy decisions can significantly influence NZD due to New Zealand’s reliance on trade with Asia-Pacific partners.

Fed Independence in Question, Weighs on the USD

The US Dollar is under pressure amid renewed concerns over the Federal Reserve’s independence. President Donald Trump indicated he could appoint a new Fed chair next year, raising questions about political influence on monetary policy.

“I know within three or four people whom I’m going to pick,” said Trump at the NATO summit, criticizing Fed Chair Jerome Powell as “terrible.”

Such comments have rattled currency markets, leading to broader USD weakness and providing support to NZD/USD.

New Zealand’s Economic Outlook Brightens

New Zealand’s domestic economic indicators have also contributed to Kiwi strength:

ANZ Roy Morgan Consumer Confidence rose to 98.8 in June, its highest since December.
Q1 GDP and May trade surplus exceeded expectations.
The Reserve Bank of New Zealand (RBNZ) is likely to delay further interest rate cuts, lending policy support to the NZD.