Australian and New Zealand Dollars Rebound Following Tariff Exemptions
SYDNEY: April 14, 2025 – The Australian and New Zealand dollars have remarkably rebounded from recent losses, buoyed by the recent tariff exemptions announced by former President Donald Trump on crucial technological imports such as electronics and semiconductors. This shift comes after markets reacted severely on April 2 when Trump unveiled sweeping tariffs on a wide range of global imports, leading to a significant sell-off in financial markets and a notable retreat from U.S. assets.
Tariff Changes and Market Reactions
Following the announcements from Washington, both the Australian (AUD) and New Zealand (NZD) currencies faced downward pressure. However, the recent exemption from tariffs seems to have restored investor confidence and led to a reversal of their fortunes. As of Monday, the New Zealand dollar reached a four-month high at 0.5860, although it faced some resistance, closing the day at 0.5843—reflecting a 0.3% gain. This surge marks an impressive increase of 4% in the previous week, signifying the largest weekly gain for the Kiwi since 2020. The Australian dollar followed suit, registering a modest increase of 0.1% to $0.6290. It too enjoyed substantial gains, rising by 4.1% the week prior, marking its largest weekly gain in five years. Although the Aussie dollar remains below its peak of $0.6409 seen earlier this year, it has effectively recovered from the April 2 closure of $0.6299. U.S. Dollar Trends and Future Expectations
The rebound of the Australian and New Zealand dollars is particularly notable given their historical performance as vulnerable currencies amidst financial instability. Kristina Clifton, an economist at the Commonwealth Bank of Australia, noted that the ongoing decline of the U.S. dollar has played a significant role in this recovery. Clifton indicated that if the trend of moving away from U.S. assets continues, the Australian dollar may see further upward movement.
Economic data from China supports this scenario, showing a 12.4% increase in exports for March—largely attributed to manufacturers rushing to ship goods before U.S. tariffs took effect. In contrast, imports from China fell by 4.3%. President Xi Jinping has recently been mobilizing efforts within Southeast Asia, fostering relationships with key trading partners amid ongoing trade tensions with the U.S.
Upcoming Economic Indicators
As the financial landscape evolves, traders are now looking ahead for critical indicators that could impact the Australian dollar. The minutes from the Reserve Bank of Australia’s latest policy meeting are expected to be released on Tuesday, alongside New Zealand’s quarterly Consumer Price Index (CPI) figures and Australia’s employment data, which is set to be unveiled on Thursday.
Market analysts forecast an increase of approximately 35,000 new jobs for March, a positive sign offsetting a prior loss of 52,800 jobs in February. However, experts anticipate a slight uptick in the unemployment rate to 4.2%, up from the previous 4.1%.
Swaps markets currently suggest that a quarter-point interest rate cut by the Reserve Bank of Australia is fully priced in for May, with a potential 20% chance of an even larger half-point reduction. Economists project overall easing measures may reach a total of 115 basis points throughout 2025. As global markets continue to adjust to the changing landscape of tariffs and international trade, the rebound of the Australian and New Zealand dollars highlights a pivotal moment where investor sentiment is significantly shaped by geopolitical developments, especially pertaining to U.S.-China relations.
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