The NZ Dollar Slumps To A 4-year Low As Trade War Rages
0

The NZ Dollar Slumps To A 4-year Low As Trade War Rages

It is one terrible news after the other the USA-China Trade war still raging on. This week’s victim has been the NZ Dollar that slumped to an almost four-year low trading against the USD. This happens as data indicates the ANZ Business confidence slid to -52.3 this August against a previous mark of -44.3.

More pessimistic news in the offing

The ANZ Business Confidence in August is the lowest it has been since April 2008, eleven years in between. While this was happening, it triggered a chain of reactions that resulted in the NZS/USD pair falling 0.4% to 0.6309. This is the lowest the pair has recorded since September 2015.

The NZ Dollar also affected the value of the Aussie dollar. The AUD saw a 0.1% slip to trade at 0.6728 against the USD.

It is however interesting to note that the US dollar index has remained unchanged at 98.132. Experts are viewing this as the dominance of the United States in this Trade War.

The US Remains Unbothered

The Bloomberg interviewed the US Treasury Secretary Steven Mnuchin this week. He reiterated that the United States does not wish to intervene in the currency markets. Although he clearly stated that this might be temporary, market observers are viewing this as the United States being unbothered. The US upholds this stance even as the NZ dollar becomes the newest victim of the trade war.

Mnuchin, just like his boss, the US President, continues to fuel speculation. In the interview, he stated that he thinks Chinese negotiators might visit his Washington office for talks. While saying this, however, he failed to confirm if a previously planned meeting in September would take place.

One thing Mnuchin confirmed, however, is that they continue to be in talks with the Chinese as the trade war continues. Mnuchin also confirmed that he was in touch with Yi Gang, the governor of the People’s Bank of China. This is because the US suspects there is manipulation of the Yuan after it registered new lows this week. It is good to remember that the safe-haven Yuan slumped to an 11-year low this Monday prompting investor panic.

The Federal Reserve is Lagging Behind

With both countries in the trade war threatening each other with tariffs, this escalation is causing ripple effects all over. Gold is seeing a surge in its value, but other currencies such as the NZ Dollar are not so lucky. The Yen, however, moved up today trading at 105.91 against the USD. This represents a positive 0.2% change when a huge chunk of the market was trading in the red.

President Trump, however, continues to criticize the US Federal Reserve for what he calls its inability to keep up with the competition. The president has been pushing for the Federal Reserve to lower rates in a move he touts to be competitive. Experts are however skeptical of the effects that this move will have on the economy factoring in that the trade war continues.

Nevertheless, even as the world continues to watch what will happen next in the USA-China Trade war, experts are pessimistic. The latest slump by the NZ Dollar and its Aussie counterpart are true revelation that things are not getting any better.

Read more: NZ Dollar Falls as RBNZ Considers Unconventional Policy Strategy

Comments Rating 0 (0 reviews)

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!

Leave a Reply

Sending

Subscribe to Our Newsletters

Have the best of Finance Brokerage News delivered directly to your mailbox. Subscribe now to receive the latest market news.

Welcome to Email Subscribers Group Selector