The New Zealand dollar weakened to around $0.566 on Tuesday, reversing a strong 1.6% gain from the previous session, as the US dollar rebounded following news of President Trump’s trade policies. On Monday, Trump proposed 25% tariffs on Mexico and Canada as early as February and hinted at stricter tariffs on China, New Zealand’s largest trading partner. Domestically, investors are awaiting Wednesday’s CPI data, with the annual inflation rate expected to ease to its lowest level since 2021. Markets continue to price in an 80% chance that the Reserve Bank of New Zealand will lower its cash rate from 4.25% to 3.75% next month. On the economic data front, New Zealand’s BusinessNZ Performance of Services Index fell to 47.9 in December, marking a 1.2-point drop from November and the tenth consecutive month of contraction.
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