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Australian Dollar New Zealand Dollar (AUD/NZD) Exchange Rate Becomes Bearish on Trade War Fears

New Zealand Dollar Exchange Rates

Trump Announces Import Tariffs on Chinese Goods – AUD/NZD Exchange Rate Comes Under Pressure

US President Donald Trump recently announced his intentions to levy import tariffs on up to $60bn in Chinese goods, as well as plans to reduce Chinese investment in the US.

This news, whilst expected, has knocked the markets onto uncertain footing, with traders anxious that it could escalate into a global trade war.

Nonetheless, the White House has asserted that the tariffs are necessary in order to counter unfair competition from China, particularly their sizable import tariffs and trade surplus against the United States.

‘We have a tremendous intellectual property theft problem’, President Trump said, asserting that the tariffs would protect American industry and ‘make us a much stronger, much richer nation’.

This move was shortly followed by China threatening to levy tariffs of their own on $3bn worth of US imports, but Beijing has also asked the US to negotiate in order to reach a settlement, seemingly demonstrating that they are far more interested in talking than engaging in a direct trade confrontation with the US.

The news has not been greeted well by the markets, however, with the ‘Greenback’ quickly falling in demand, thus giving commodity currencies like the Australian Dollar and the New Zealand Dollar extra room to capitalise.

Australian Employment Disappoints – AUD Exchange Rate Unperturbed

Today is a quiet day for Australian ecostats, but yesterday’s disappointing round of Australian labour market readings could still weigh on the outlook of AUD exchange rates.

According to the Australian Bureau of Statistics, unemployment in Australia rose to 5.6% in February, up from the previous period’s print of 5.6%.

This is particularly pertinent in that employment is the central focus of the Reserve Bank of Australia (RBA) at the moment, with the latest rise in unemployed peoples liable to push the RBA even further away from hawkish policy decision for the foreseeable future.

Australian Dollar New Zealand Dollar (AUD/NZD) Exchange Rate Forecast: Adrian Orr Assumes Governance of the RBNZ

The AUD/NZD exchange rate could see greater volatility next week with Adrian Orr set to become Governor of the Reserve Bank of New Zealand (RBNZ) on the 27th of March.

Economists and Reserve Bank watches are currently anticipating this event, as Orr is seen by many to be a highly capable economist as well as a skilled communicator, thus many are keen to see his approach to monetary policy and forward guidance.

Nonetheless, this shift (like many) involves a degree of uncertainty, of which markets tend to abhor.

If Orr’s stance on monetary policy is deemed too cautious then the AUD/NZD exchange rate could find room to climb, especially with the central bank already regarded as dovish.

Optimism, on the other hand, could put AUD/NZD under fresh pressure.