FX.co ★ Kiwi Dollar Slips Toward 3-Week Low

On Monday, the New Zealand dollar declined to approximately $0.599, nearing a three-week low, as it continued its descent from the last trading session. This downturn was spurred by renewed concerns over a potential global trade war following fresh tariff threats from the United States. President Trump announced a 30% tariff imposition on goods from the European Union and Mexico, set to begin on August 1, and cautioned about additional tariffs on other nations, urging these trade partners to return to the negotiation table. On the domestic front, the Reserve Bank of New Zealand maintained its cash rate at 3.25% last week, which was anticipated. However, the bank indicated it could consider a rate cut in August if the economic situation demands it. Current market speculation suggests a 65% probability of a 25 basis point reduction next month, with nearly an equal chance of a further decrease to 2.75%. This dovish outlook arises amid continued weak economic data, notably the persistent contraction in New Zealand’s services sector in June, compounded by lackluster consumer confidence, elevated living costs, and prevailing uncertainty. Additionally, market participants are closely monitoring Chinese trade data for insights into the repercussions of US tariffs and any preemptive trade activities, given the robust trade relationship between New Zealand and China.