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NZ dollar benefits from optimism US, China can reach trade deal

Thursday 27th June 2019

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The New Zealand dollar rose as sentiment improves ahead of the G20 meeting in Japan this weekend. 

The kiwi was trading at 66.80 US cents at 7:55am from 65.52 US cents at 5pm in Wellington. The trade-weighted index was at 72.92 from 72.72. 

Markets got a lift when US Treasury Secretary Steven Mnuchin told CNBC on Wednesday the US and China were close to a trade deal and that he’s optimistic progress can be made during talks between President Donald Trump and China’s leader Xi Jinping.

"We are about 90 percent of the way there and I think there's a path to complete this," he said. 

"The financial world seems a slightly happier place this morning... the risk dial has been cranked a little higher," said Kiwibank dealer Mike Shirley. 

While the two leaders may agree to another tariff ceasefire on the sidelines of this weekend’s G20 summit in Osaka, doubts remain on the pace of the progress. 

"Given the differences between the two sides, we suspect that any truce will prove temporary," said Capital Economics. "The conclusions of the summit itself are likely to be vague, with the group still divided over the way forward on issues like WTO reform, climate change and sustainable investment."

The New Zealand dollar also continued to benefit after the central bank kept rates on hold at 1.50 percent yesterday. 

Today's ANZ business outlook survey at 1pm will garner interest as markets look to see if business sentiment has improved at all. 

The kiwi was trading at 95.55 Australian cents from 95.51. It was at 52.62  British pence from 52.49, at 58.75 euro cents from 58.56, at 72.01 yen from 71.49, and at 4.5946 Chinese yuan from 4.5826. 

(BusinessDesk)

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