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NZ dollar near 2-week low as Trump takes hard-line stance on trade

Monday 3rd September 2018

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The New Zealand dollar traded near a two-week low as US President Donald Trump reverted to his hard-line stance on trade as North American Free Trade Agreement talks and a review into Chinese tariffs come to a close. 

The kiwi traded at 66.15 US cents as at 8am in Wellington from 66.18 cents on Friday in New York, down from 66.47 cents in Asia last week. The trade-weighted index was at 71.78 from 71.80. 

The US dollar index gained 0.4 percent as Trump stuck to an aggressive line on trade, accusing the European Union of being "almost as bad as China, just smaller" in an interview with Bloomberg. Separately, he said Canada doesn't have to be in the Nafta deal and has signalled plans to proceed with a bilateral agreement with Mexico. Meantime, Trump is reportedly keen to press ahead with US$200 billion of tariffs on Chinese imports as early as this week. 

"The near-term threat (to the kiwi) remains a break of the mid-August low of US$0.6545," Bank of New Zealand senior markets strategist Jason Wong said in a note. "Trump’s decision on whether to impose further tariffs on another US$200 billion of Chinese imports could come as soon as later this week. Doing so and threatening to propose tariffs on the full US$500 billion-plus of Chinese imports would probably be enough to see that level broken."

Wong said if Trump backtracks on that stance it could spur a rally in the kiwi. 

Local data today include June quarter terms of trade, which ANZ Bank New Zealand economists predict will rise about 1 percent in the three month period from a 1.9 percent fall in March. Australian data on retail sales, manufacturing, housing, inventories and company profits, and Chinese manufacturing figures will also be watched. The US is closed on Monday for the Labor Day holiday. 

The kiwi fell to 91.86 Australian cents from 92.08 cents on Friday in New York and declined to 4.5174 Chinese yuan from 4.5290 yuan. It decreased to 73.46 yen from 73.65 yen last week and traded at 51.07 British pence from 51.11 pence. The kiwi slipped to 56.99 euro cents from 57.18 cents last week. 

(BusinessDesk)

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