Monday 23rd July 2018
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The New Zealand dollar gained as US President complained about the greenback's recent strength and rising US interest rates at a time when his administration is engaged in a trade war with China.
The kiwi traded at 67.91 US cents as at 8am in Wellington from 68.07 cents on Friday in New York, and was up from and 67.54 cents last week in Asia. The trade-weighted index was at 72.90 from 73.08.
The US dollar index, a measure of the greenback against a basket of currencies, fell 0.7 percent after Trump tweeted that "China, the European Union and others have been manipulating their currencies and interest rates lower, while the US is raising rates while the dollars gets stronger and stronger with each passing day - taking away our big competitive edge". The greenback has been buoyed by the Federal Reserve's tighter monetary policy, although that's added pressure to US exporters at a time when the White House is imposing tariffs on trading partners in an effort to bolster domestic industries.
"Trump’s double down has some speculating he’s setting up the Fed as a scapegoat should his tax and trade policies fail to deliver," ANZ Bank New Zealand economists Miles Workman and Philip Borkin said in a note. "Domestic developments have taken a back seat for now, with the NZD at the whims of global forces, although it is not like that picture is overly clear at present."
The People's Bank of China has been setting the yuan's reference rate lower and introducing measures to support credit growth in the world's second-biggest economy to offset slowing growth. The moves have also been seen as a broader effort to minimise the impact of the trade war on Chinese exporters. The kiwi decreased to 4.5974 Chinese yuan from 4.6055 yuan.
With no local data today investors will continue to take their cues from overseas.
The kiwi fell to 75.60 yen from 75.82 yen on Friday in New York and declined to 91.46 Australian cents from 91.74 cents. It fell to 57.84 euro cents from 58.04 cents last week and traded at 51.72 British pence from 51.79 pence.
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