DEFINITION of 'NZD/USD (New Zealand Dollar/U.S. Dollar) '
The abbreviation for the New Zealand dollar and U.S. dollar (NZD/USD) currency pair or cross. The currency pair tells the reader how many U.S. dollars (the quote currency) are needed to purchase one New Zealand dollar (the base currency).
Trading the NZD/USD currency pair is also known as trading the "Kiwi".
BREAKING DOWN 'NZD/USD (New Zealand Dollar/U.S. Dollar) '
The value of the NZD/USD pair is quoted as 1 New Zealand dollar per X U.S. dollars. For example, if the pair is trading at 1.50, it means that it takes 1.5 U.S. dollars to buy 1 New Zealand dollar.
The NZD/USD is affected by factors that influence the value of the New Zealand dollar and/or the U.S. dollar in relation to each other and other currencies. For this reason, the interest rate differential between the Reserve Bank of New Zealand (RBNZ) and the Federal Reserve (Fed) will affect the value of these currencies when compared to each other. When the Fed intervenes in open market activities to make the U.S. dollar stronger, for example, the value of the NZD/USD cross could decline, due to a strengthening of the U.S. dollar when compared to the New Zealand dollar.
The NZD/USD tends to have a positive correlation to the AUD/USD, EUR/USD and GBP/USD currency pairs. This is because of the positive correlation of the New Zealand dollar to the euro, the British pound and the Australian dollar.