Thursday 28th February 2019
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The New Zealand dollar was weaker as investors fret about whether the US and China will be able to reach a deal after US trade negotiator Robert Lighthizer told the House Ways and Means committee there's still hard work to be done.
The kiwi traded at 68.40 US cents at 7:45 am in Wellington versus 68.87 late yesterday. The trade-weighted index was at 73.84 points from 74.26.
Lighthizer said the US is pushing for a deal that includes "significant structural changes" to China's economic model and that it is enforceable. According to Bloomberg, he said it is still too early to see if China will concede to those demands.
ANZ Bank FX/Rates strategist Sandeep Parekh says the demands are a "a pretty high hurdle, and there was a modest risk-off move in markets in response." He notes the comments are not entirely in line with US President Trump’s tweets earlier in the week suggesting that a deal was close, which added to the jitters in markets.
Lighthizer also explicitly noted that China simply buying more US exports was not sufficient, and said that signing a deal - with two “ifs” thrown in for good measure - wouldn’t be the end of it, given a lack of trust that commitments would be made good on, said Parekh.
Looking ahead domestically, investors will be watching for ANZ business confidence data as well as capex and private sector credit data in Australia and China PMIs.
The New Zealand dollar was trading at 95.88 Australian cents from 96.17, at 75.88 yen from 76.17, at 51.39 British pence from 51.99, at 60.12 euro cents from 60.53 and 4.5720 Chinese yuan from 4.6092.
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