- The US imposed a 10% tariff on Australian and New Zealand imports, triggering sharp declines in both currencies and increasing market risk aversion.
- Markets are now focused on the Reserve Bank of New Zealand’s upcoming decision, with a widely expected 25-basis point rate cut likely to influence the NZD’s next move.
Risk aversion intensified on Friday, sending the Australian dollar down 4.56% and the New Zealand dollar 3.53% lower.
The declines followed a move by US President Donald Trump to impose a 10% tariff on imports from both Australia and New Zealand. Australian Prime Minister Anthony Albanese confirmed there would be no retaliation, noting the US represents less than 5% of Australia’s export market. New Zealand, with a higher 12% exposure, also ruled out countermeasures.
For the New Zealand dollar, markets will now be focused on this week’s Reserve Bank of New Zealand decision, where a 25-basis point rate cut is widely expected. Barring further tariff news, this could be the most important event determining whether this sell-off continues.
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