NZ dollar moving higher as markets buoyed by US-China trade truce

Tuesday 4th December 2018

The New Zealand dollar was trading higher as markets continued to be cheered by the truce in the US-China trade skirmish.

The kiwi traded at 69.25 US cents at 8am in Wellington from 69.10 cents at 5pm yesterday. The trade-weighted index was at 75.21 from 75.10.

Washington and Beijing agreed to a 90-day trade ceasefire at the G20 summit in Argentina on Saturday, giving risk appetite a lift after months of concern about a possible slowdown in global growth. Treasury Secretary Steve Mnuchin said China has made more than $1.2 trillion in additional trade commitments as part of a deal and said there was a clear shift in tone at Buenos Aires from past discussions with Chinese officials, Reuters reported.

"While the pace of ascent has slowed, the NZD is still being impacted by the positive tone left after the weekend’s G20 meeting, which sees it grinding higher. It won’t be a simple or easy path upwards, but that still looks like the most likely road at this stage," ANZ chief economist Sharon Zollner said.

She said, however, "the kiwi remains at the mercy of global forces."

Looking ahead she said there is no domestic data today but investors will be watching for Australia's weekly consumer confidence, balance of payment data and the Reserve Bank of Australia rate decision later in the afternoon.

The RBA is expected to stay on hold. While it seems relaxed about a slide in Aussie house prices it has noted the downside risk for the economy, Zollner said.

"This means the RBA will be reluctant to tighten until the market is broadly stable," she said.

The kiwi traded at 94.14 Australian cents from 93.79 cents late yesterday and at 4.7636 Chinese yuan from 4.7815 yuan. It climbed to 78.68 yen from 78.43 yen.

The local currency traded at 54.36 British pence from 54.07 pence and at 60.98 euro cents from 60.86 euro cents.

(BusinessDesk)

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