Macro FX

Saxo Group

Summary:  Rugby, sheep and landscapes that look suspiciously like Middle Earth. Yes, we've arrived in New Zealand and while you won't meet any hobbits here, you will encounter Kiwis, as the locals call themselves. You'll also meet the local currency, the New Zealand dollar, which ranks as the tenth-most traded currency in the world, accounting for 2.1% of daily trades.


“Kiwi” is also the nickname given to the NZDUSD currency pair – the New Zealand dollar against the US Dollar. When you travel, you might see the exchange rate between these two currencies posted by banks or exchange desks. A quote of 0.691, for instance, means you’ll need 0.691 US Dollars (the quote currency) to buy 1 New Zealand dollar (the base currency). Want to buy 100 New Zealand dollars? That will cost just 69.10 USD.

Driving the Kiwi

NZDUSD is driven by a number of factors that affect the value of the New Zealand dollar and US Dollar in relation to each other. For instance, economic indicators such as job reports and interest rate decisions by the Reserve Bank of New Zealand (RBNZ) or the Federal Reserve can move the Kiwi higher or lower, enabling traders to spot opportunities.

Naturally wealthy

New Zealand is rich in natural resources and is a major exporter of agricultural products, including meat and wool. It’s also the world’s top exporter of milk products, which links New Zealand’s economy and its currency directly to dairy prices. If milk prices rise, for example, NZD can be expected to strengthen. If they fall, traders might expect the New Zealand dollar to fall as well.

With its legendary natural beauty, it’s not surprising that tourism also plays a key role in the country’s economy. Traders may want to keep an eye on New Zealand tourism figures, as they could be yet another indicator affecting the value of the Kiwi.

Carry on trading

New Zealand is also known for its higher central bank interest rate. This makes the New Zealand dollar popular with investors who buy NZD using a lower-interest yield currency. This strategy, known as a “carry trade”, is most appropriate for investors who know how to handle volatility and risk in their trading.

Trade NZDUSD your way

With Saxo, you can trade NZDUSD and other FX pairs with true flexibility. Buy and sell currency pairs with Spot FX, get a jump on future prices with FX options or hedge your exposure with FX swaps. You can also trade cryptocurrencies against USD and other major currencies with our Crypto FX pairs.

Please note that FX related instruments are traded with leverage and small price fluctuations can lead to larger losses if market volatility increases. FX markets are sensitive to political and macroeconomic events, which can drive prices higher or lower rapidly. Therefore, you should ensure that you understand the risks before trading.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

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