The Aussie and Kiwi rebounded slightly on Tuesday. Both currencies bounced back after touching five-year lows on Monday. The Australian dollar rose 0.4% to $0.6015, away from $0.5933. Similarly, the Kiwi climbed to $0.5562 after dropping to $0.5504.
This bounce came after a short squeeze helped reverse steep losses. However, gains remain limited. Last week, the Australian dollar dropped nearly 4%. The market remains extremely volatile. And still, Aussie and Kiwi outlooks are uncertain.
Australian bond futures fell sharply due to sudden U.S. Treasury changes. Three-year bond futures dropped to 96.620 from 96.750. This rapid shift left traders scrambling to adjust. The surprise movement in U.S. markets continues to ripple worldwide.
Geopolitical risks continue to weigh heavily. President Trump recently threatened more tariffs on Chinese goods. He signaled a potential 50% levy increase if China doesn’t ease its own tariffs. In response, China’s commerce ministry refused to yield. They labeled the move as “blackmail.”
These tensions deeply affect Australia. China remains its largest export destination. Therefore, any strain between the U.S. and China could have major consequences for both the Aussie and Kiwi.
Amid the market chaos, Australian consumer confidence has fallen. A recent Westpac survey revealed a sharp decline in sentiment last week. Households are clearly reacting to global financial instability.
Investors now believe the Reserve Bank of Australia will act. Markets fully expect a 25-basis-point cut in May. Some even expect a larger 50-basis-point move. Analysts forecast rates could fall to 3% by year-end.
In New Zealand, similar pressure is building. The Reserve Bank of New Zealand meets on Wednesday. Most anticipate a 25-basis-point cut in the 3.75% OCR. Some predict a drop to 3.25%, possibly lower later in 2025.
Westpac economist Kelly Eckhold noted: “Markets see a lower OCR ahead, driven by global trade shocks.” She added that the RBNZ might signal a move toward 3% soon.
Although markets are stabilizing, many challenges lie ahead. Stay ahead with the latest insights—read more market news and analysis on our blog:
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Aussie and Kiwi gain after hitting five-year lows, but challenges remain. From trade tensions to expected rate cuts, stay informed.
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