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NZ Dollar gets lift after US proposes new round of China trade talks

Thursday 13th September 2018

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The New Zealand dollar was trading higher after investor risk appetite was stoked by news that US officials are looking to re-open trade talks with China. 

The kiwi traded at 65.62 US cents at 8am in Wellington versus 65.10 US cents at 5pm yesterday. The trade-weighted index was at 71.31 from 71.13 yesterday.

Global risk appetite got a lift after the Wall Street Journal reported that senior US officials led by Treasury Secretary Steven Mnuchin sent invitations to their counterparts in Beijing proposing another round of bilateral trade talks. CNBC also reported that the US plans to delay the announcement of another round of tariffs on Chinese goods due to a hurricane approaching the Carolina coast.

Markets have been watching closely, with the US ready to go on another $200 billion in tariffs and President Donald Trump making additional threats last week. Jitters about the US-China trade war had weighed heavily on currencies like the New Zealand dollar, given the country's dependence on exports. 

The greenback also came under some pressure when the US producer-price index for August was below expectations. The Federal Reserve's Beige Book also noted that concerns over trade tensions have led some businesses to postpone investment, with input prices reportedly on the rise due to tariffs.

"Soft US PPI data and reports that the US has reached out to China to resume trade talks saw the USD weaken and boosted cyclical currencies. If the trade reports are legit, then this move could extend. Otherwise,  we will quickly head back towards support," said ANZ Bank senior macro strategist Philip Borkin. The kiwi has support at 64.70 US cents and resistance at 66.40 US cents, he said. 

Domestically, Borkin said the market will be watching for housing market data and food price data this morning, followed by Australia's labour market statistics. 

The kiwi traded at 4.4998 Chinese yuan from 4.4795 yuan yesterday. 

The kiwi traded at 91.46 Australian cents from 91.62 cents and at 72.98 yen from 72.71 yen yesterday. It was at 56.43 euro cents from 56.25 cents and at 50.27 British pence from 50.06 pence yesterday.


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