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• NZD/USD falls as the US Dollar gains strength, following China’s decision to exempt certain US imports from its 125% tariffs.
• US Agriculture Secretary Brooke Rollins noted that the Trump administration is holding daily discussions with China over tariff issues.
• The New Zealand Dollar remains under additional pressure amid growing signs of weakening demand from China.

The NZD/USD pair continues to weaken for the second consecutive session, trading near 0.5940 during Monday’s European session. The decline is largely driven by a strengthening US Dollar (USD) amid signs of easing tensions between the US and China.

China announced the exemption of certain US imports from its steep 125% tariffs on Friday, according to business sources. This development has sparked optimism that the prolonged trade dispute between the world's two largest economies could be nearing an end.

Additionally, US Agriculture Secretary Brooke Rollins stated on Sunday, as reported by Reuters, that the Trump administration is engaging in daily discussions with China regarding tariffs. Rollins also noted that negotiations with other trading partners were progressing and that several trade agreements were "very close" to completion.

Despite the positive sentiment, US Treasury yields remained muted on Monday, with the 2-year and 10-year notes yielding 3.75% and 4.24%, respectively, as investors await key economic data expected later this week to assess the initial effects of US President Donald Trump’s tariffs.

The New Zealand Dollar (NZD) also faces additional pressure amid signs of slowing demand from China. Reports indicate that some Chinese manufacturers are suspending production and seeking alternative markets in response to US tariffs, leading to reduced orders and impacting employment. Although not yet widespread, these disruptions could ultimately hurt New Zealand’s export sector, given China’s status as a major trading partner.

Moreover, the NZD remains under pressure as markets increasingly expect the Reserve Bank of New Zealand (RBNZ) to deliver additional monetary stimulus. A 25-basis-point rate cut is largely priced in for the RBNZ’s May meeting, with forecasts suggesting rates could bottom out at 2.75% by the end of the year.

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