Kiwi Dollar Rises Amid US Dollar Weakness and Strong Commodities

The New Zealand dollar has risen by 7.5% this year due to strong commodity prices and concerns about the US dollar losing its status as the world's reserve currency. The greenback has been under pressure from erratic US policymaking, rising trade barriers, and a slowing US economy. Other major currencies have also gained, with the Kiwi now trading at around US60c.

The New Zealand dollar (NZD) has experienced a significant rise this year, reaching a level of around US$0.60, a 7.5% increase from its starting point. This surge in value can be attributed to a combination of strong commodity prices and concerns about the US dollar losing its status as the world's primary reserve currency.

The NZD has been bolstered by robust commodity prices, particularly in the dairy industry, which is a major export for New Zealand. High dairy prices contribute positively to the economy, thereby supporting the NZD. Additionally, the Reserve Bank of New Zealand (RBNZ) has maintained interest rates at 3.25%, which is seen as a hawkish stance that attracts foreign investment and strengthens the currency [1].

The US dollar has been under pressure due to erratic policymaking, rising trade barriers, and a slowing economy. These factors have led to a weakening of the USD, making the NZD more attractive to investors. The NZD/USD pair has traded with a positive bias in recent days, reflecting the reduced expectations of a rate cut by the RBNZ [2].

Geopolitical tensions in the Middle East have also contributed to the NZD's strength. Rising tensions and the possibility of US involvement in the Israel-Iran conflict have led investors to seek safer havens, which has boosted the NZD [3].

In the coming weeks, the focus will be on the Federal Reserve's (Fed) interest rate decision and the accompanying policy statement. The Fed is expected to maintain the status quo, but investors will be closely watching for any hints about future rate cuts. The RBNZ's interest rate decision in July will also be crucial, as it is expected to keep rates at 3.25% despite hotter inflation in New Zealand.

The NZD's performance is likely to continue to be influenced by these factors, with commodity prices, US dollar weakness, and geopolitical tensions all playing a role in its valuation.

References:
[1] https://www.tradingview.com/news/te_news:463687:0-new-zealand-current-account-gap-shrinks-in-q1/
[2] https://www.fxstreet.com/news/nzd-usd-gathers-strength-above-06000-fed-rate-decision-in-focus-202506180049
[3] https://www.fxstreet.com/news/nzd-usd-clings-to-gains-around-06065-06070-remains-close-to-ytd-peak-ahead-of-us-retail-sales-202506170733