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NZD/USD pared recent losses and is trading around 0.5660 during the European morning Monday. However, the pair could face challenges again as trade war concerns escalate. U.S. President Donald Trump told reporters aboard Air Force One that he planned to impose a 25% tariff on all steel and aluminum imports, but did not specify the countries affected.
President Trump also said additional reciprocal tariffs would be announced by mid-week and take effect almost immediately, with the rates matching each country’s tariff rates, Reuters reported.
The New Zealand dollar also weakened on growing concerns about the U.S.-China trade war due to New Zealand’s close economic ties with China. New U.S. tariffs on Chinese imports took effect last week, while China’s retaliatory tariffs on certain U.S. exports took effect on Monday.
The U.S. Dollar Index (DXY), which measures the value of the greenback against six major currencies, remained above 108.00 at the time of writing. The dollar found support as the Federal Reserve expected to keep interest rates unchanged this year after the January jobs report showed slower job growth but a lower unemployment rate.
Chicago Federal Reserve Bank President Austan Goolsbee said on Friday that the U.S. government’s inconsistent policies have led to a high degree of economic uncertainty, making it difficult for the Fed to determine the direction of the economy, especially inflation.
Meanwhile, Federal Reserve Board member Adrienne Kugler noted that U.S. growth and economic activity remain generally healthy, but noted that the Fed’s progress toward its inflation goal has been somewhat uneven, Reuters reported.
