The NZD/USD pair experienced a decline during the Asian session on Tuesday, trading around 0.5645. The US Dollar (USD) rebounded after US President Donald Trump announced his intention to impose 25% tariffs on Canada and Mexico starting February 1.
Trump stated on Monday that tariffs could be imposed as early as February, citing concerns over border issues. “We’re thinking in terms of 25% (levies) on Mexico and Canada because they’re allowing a cast number of people over the border,” he said. The announcement gave the Greenback some relief after recent losses.
The US Dollar Index (DXY), which tracks the value of the USD against major currencies, bounced off a two-week low and rose above 108.50, gaining 0.40% on the day.
Market participants are closely monitoring tariff-related developments, especially in light of Trump’s previous threats to impose tariffs of up to 60% on China. Such moves could significantly impact the New Zealand Dollar, given China’s importance as a major trading partner for New Zealand.
Adding pressure on the Kiwi, New Zealand’s Performance of Services Index (PSI) dropped to 47.9 in December from 49.5 in November, marking ten consecutive months of contraction. This disappointing economic data contributed further to the NZD’s decline.
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