New Zealand Dollar declines as risk-off mood supports US Dollar
NZD/USD extends its losses for the third consecutive day, trading around 0.5810 during the Asian hours on Tuesday. The pair depreciates as the US Dollar (USD) holds steady amid broad market caution. Investors remain on the defensive as they await further updates regarding Iran’s unresolved nuclear program.
Both Washington and Tehran have not released the official text of the agreement; major shipping lines are delaying vessel rerouting through the strategic waterway until full transparency is established.
Even though US President Donald Trump announced that a memorandum of understanding (MoU) has been signed to end the conflict and reopen the blockaded Strait of Hormuz, market participants remain deeply cautious. According to Iran's semi-official Mehr agency, the current draft calls for the strait to reopen within 30 days under Iranian arrangements.
The Federal Reserve (Fed) is widely expected to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% on Wednesday, which could be attributed to the higher US inflation due to elevated energy prices linked to Middle East tensions. Traders will be closely monitoring the press conference for cues on how new Fed Chair Kevin Warsh intends to lead the central bank into its next era.
The New Zealand Dollar (NZD) struggles following a wave of weak economic data out of China. Because China is New Zealand's largest trading partner, buying roughly one-third of all Kiwi goods exports, the New Zealand Dollar acts as a primary liquid proxy for the Chinese economy.
China's domestic demand slumped sharply in May, with Retail Sales contracting by 0.6% year-on-year against expectations of a flat reading. Additionally, Fixed Asset Investment dropped at a faster pace of -4.1%, failing to meet the projected -2%. While Industrial Production offered a minor bright spot by coming in stronger-than-expected at 4.5%.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Indian Rupee outperforms amid strong foreign inflows, shrugging off surging US Dollar
USD/JPY Price Forecast: Enters fresh upside leg on consolidation breakout
CoreWeave's quarterly report hits record highs, but Bernstein and HSBC still maintain "sell" ratings
The main concerns focus on three major issues: management claims an annual price of $20-25 million per megawatt, while actual financial data shows only $9.2 million; independent calculations by two institutions both indicate a financing gap of about $33 billion; by 2028, the market will see an influx of 55 gigawatts of new computing power, 20 times CoreWeave’s own capacity. With current debt at $46.9 billion and equity only $4 billion, and no free cash flow within this decade—the question of whether its scarce performance can last until the loans are repaid is something even strong quarterly reports cannot answer.
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners
Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.
Crypto prices
More
