The New Zealand dollar traded around $0.576 on Friday, hovering at its highest level in over two months and on track for its third consecutive weekly gain.
On Thursday, the currency surged 1% after U.S. President Donald Trump stated a trade deal with China was “possible”, although he did not provide specific details.
China is New Zealand’s largest trading partner, and trade tensions between China and the U.S. could significantly impact the New Zealand economy.
On the monetary policy front, the Reserve Bank of New Zealand on Wednesday delivered a widely expected 50bps cut to its official cash rate to a two year low of 3.75%.
While the central bank signaled the possibility of further rate reductions, it also indicated that future cuts would likely be smaller and that the easing cycle was nearing the end.
In economic news, the country’s trade deficit narrowed sharpy to NZ$486 million in January from NZ$1,064 million in the same month last year, as exports rose much faster than imports.