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NZ dollar hits 2-week low as China says it will respond to tougher US tariffs

Friday 3rd August 2018

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The New Zealand dollar fell to a two-week low as global trade tensions escalated with Chinese authorities saying they were prepared to respond to harsher US tariffs. 

The kiwi dropped as low as 67.37 US cents, trading at 67.40 cents as at 8am in Wellington from 67.75 cents yesterday. The trade-weighted index declined to 72.77 from 72.98 yesterday. 

China's Ministry of Commerce said the world's most populous nation was "fully prepared" to retaliate to protect its people after US President Donald Trump yesterday directed officials to consider imposing a bigger tariff on US$200 billion of Chinese goods than previously flagged. Heightened trade tensions between the world's two biggest economies have weighed on currencies of openly trading nations such as New Zealand. 

"It sounds like a broken record, but the escalation in trade tensions has once again knocked kiwi lower," ANZ Bank New Zealand economists Miles Workman and Philip Borkin said in a note. "Whether or not it is enough to break it out of established ranges is another question, though the key may be other crosses, with some sitting on key levels."

No local data is scheduled for today, although Australian retail sales and Chinese manufacturing figures will attract attention. The kiwi fell to 91.51 Australian cents from 91.77 cents yesterday and declined to 4.6081 Chinese yuan from 4.6179 yuan. 

The local currency traded at 51.76 British pence from 51.71 pence yesterday after the Bank of England raised its benchmark interest rate a quarter-point to 0.75 percent and said further increases will be gradual. The kiwi traded at 58.15 euro cents from 58.16 cents yesterday and fell to 75.23 yen from 75.62 yen. 


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