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.
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.
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.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)