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NZ dollar dips below 63 US cents on US-China trade worries

Tuesday 8th October 2019

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The New Zealand dollar slipped below 63 US cents as investors remained jittery about the outcome of the US-China trade talks this week.  

The kiwi was trading at 62.89 at 8am in Wellington versus 63.10 US cents at 5pm yesterday. The trade-weighted index was at 70.25 points from 70.43.

About 30 Chinese officials, led by Vice Finance Minister Liao Min, entered the U.S. Trade Representative’s office for two days of negotiations, to be followed by the first minister-level trade talks in more than two months, according to Reuters.

The White House officially confirmed that the high-level talks, involving Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would begin on Thursday.

Markets, however, were jittery when Vice Premier Liu He told dignitaries that his offer to the U.S. will not include commitments on reforming Chinese industrial policy or government subsidies, according to Bloomberg.

“A rise in risk aversion saw the kiwi struggle to maintain lift overnight. The USD firmed, as did other safe haven currencies, as Chinese officials suggested they were reluctant to agree a broad trade deal with the US,” said ANZ FX/rates strategist Sandeep Parekh.

Today, the 2018/19 Financial Statements of the government are released at 1pm. The fiscal position is likely to come in a touch stronger than the Treasury’s latest forecast owing to temporary factors, said Parekh.

According to BNZ head of research Stephen Toplis, the out-performance in the crown accounts is likely related to a new tax recognition scheme that was implemented earlier in the year.  

Investors will also be keeping an eye on Australian job ads and business confidence.

The New Zealand dollar was trading at 93.39 Australian cents from 93.45, at 67.47 yen from 67.40, at 4.4945 Chinese yuan from 4.5102, at 57.29 euro cents from 57.47 and at 51.11 British pence from 51.19.

(BusinessDesk)



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