The symbol stands for New Zealand Dollar/United States Dollar. It tells the reader about the amount of US dollars needed to buy one New Zealand Dollar. In this particular pair, the NZD is the base currency and the USD is the counter currency.
General facts and information
The New Zealand Dollar/US Dollar pair is also referred to as the Kiwi. The NZD is one of the three major commodity currencies, the other two are AUD and CAD. New Zealand was crowned in the year 2005 as the world’s most favourable country for businesses by the World Bank. This small, scenic Island is not only politically peaceful and economically strong, but is also one of the most investment-friendly countries. Lately, it has made sure that it serves as a hub for businesses and investments by being extremely lenient in the regulations it places over business activities.
The climate and land in New Zealand has enabled it to emerge as one of the most successful countries with an agrarian economy. Its services and industrial sectors are equally operational. Its export base comprises of top-notch goods and services.
The US is the world’s super power and the most favoured country by many multinational giants. It has proven itself to be an integral part of the world economy. As a result, the USD has become the globe’s most heavily traded currency.
As with all other commodity currencies, the NZD fluctuates every now and then, making the pair more or less reliant on the trends that prevail in the market.
Factors affecting the pair
Since the Kiwi is a commodity currency, the demands of the market determine the direction for the NZD/USD pair. The prices of commodities are most easily affected by seasons and natural disasters. Whenever the prices of the commodities hike, the producer of the natural resources enjoys a stronger currency, which in this case is NZD. Hence, in times of high demand and higher commodity prices, the NZD stands stronger against the USD.
Following a stronger NZD owing to increased commodity prices, the interest rates are most likely to increase. With higher interest rates, the currency is favoured by traders to be used in carry trade. However, the reversal of the situations in the markets and the commodity prices leads to a capital flight from the producer, which may result in a very rapid depreciation of the currency.
Other factors affecting the NZD/USD exchange pair include GDP per capita and inflation rates.
Taking advantage of news trading to make money while trading
Successful traders do not always stay alert during the business hours, but keep themselves busy even before the markets open and the after they close. They keep themselves up-to-date with the changing trends and indicators to help them process their next move in the world of forex. Their knowledge of revenue and changes that are anticipated in the market keep them ready for the best and the worst. Currency trading news is essential for traders who wish to make their mark in the forex markets.