The New Zealand dollar has posted strong gains on Monday. Ahead of the North American session, NZD/USD is trading at 0.5912, up 0.53% on the day.
US dollar slips on Moody’s downgrade
The US dollar is trading lower today against the major currencies, following a surprise downgrade to the US’ credit rating on Friday. Moody’s cut the long-term credit rating by on notch from “Aaa”, the highest rating, to “Aa1”. Moody’s cited the country’s “large annual fiscal deficits and growing interest costs”. The move is largely symbolic as all other major credit rating agencies have pegged the US at “Aaa” and Moody’s is simply joining the club. Still, investors have reacted by sending the US dollar broadly lower.
US Treasury yields jumped after Moody’s decision. The 30-year Treasury yield jumped above 5% for the first time in six weeks and the 10-year yield pushed above 4.5%.
While Moody’s was highlighting concerns over US fiscal policy, President Trump is pushing a bill that will provide massive tax cuts and further increase the US’ debt. Currently, the debt stands at $36 trillion and Trump’s bill would add $3 trillion to $5 trillion in debt.
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China posts mixed data
In China, the week started with mixed data for April. Industrial production dropped to 6.1% from 7.7% but beat the market estimate of 5.5%. Retail sales fell to 5.1%, down from 5.9% and below the market estimate of 5.9%. Consumers are anxious about the economic uncertainty, especially the impact of the US-China trade war. The two sides have agreed to temporarily slash tariffs while they try to hammer out a trade deal which would go a long way at calming nervous investors.
NZD/USD Technical
- NZD/USD is testing resistance at 0.5911. Above, there is resistance at 0.5941
- 0.5888 and 0.5858 are the next support levels
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NZDUSD 1- Day Chart, May, 19, 2025
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