NZD/USD slipped to around 0.5960 in early European trading on Friday, breaking its two-day winning streak. The pair’s retreat comes as traders weigh fresh U.S. trade policy risks against New Zealand’s latest economic data.
U.S. Tariff Ruling Adds Pressure to the Dollar
On Wednesday, a three-judge panel at the Manhattan Court of International Trade ruled that President Trump overstepped his authority under the Carter-era International Emergency Economic Powers Act (IEEPA). The court declared his April 2 executive order imposing broad import tariffs unlawful.
Despite this setback, reports from the Wall Street Journal suggest the administration is still considering tariffs of up to 15% for 150 days under the IEEPA. No final decision has been made, leaving markets on edge.
The threat of new U.S. tariffs may weaken the dollar in the days ahead. A softer dollar could help NZD/USD recover some of its recent losses.
U.S. Economic Data Offers Mixed Signals
U.S. first-quarter GDP contracted by 0.2% on an annualized basis. This drop was slightly smaller than the 0.3% decline economists had expected.
Personal consumption expenditures (PCE) edged up 3.6% quarter-on-quarter, matching forecasts. Core PCE, which excludes food and energy, rose 3.4%, just below the 3.5% analysts predicted.
Traders now look ahead to Friday’s release of the April PCE price index. This data could influence Fed rate-cut expectations and, in turn, dollar demand.
New Zealand Data Shows Waning Confidence
In Wellington, the ANZ-Roy Morgan Consumer Confidence Index fell to 92.9 in May from 98.3 in April. High inflation expectations continue to dampen household mood.
Building permits also disappointed, dropping 15.6% month-on-month in April. March permits had risen 10.7% (revised to 9.6%). Weaker construction activity may limit New Zealand’s economic outlook.
What’s Next for NZD/USD?
With U.S. tariff uncertainty likely to keep the dollar under pressure, the kiwi could regain ground if trade talks falter. However, domestic weakness in consumer sentiment and permits may cap any rally. Traders will watch Friday’s U.S. PCE print closely for further direction.
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