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NZ dollar eases amid trade war jitters

Friday 1st November 2019

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The New Zealand dollar eased slightly as markets turned their attention back to US-China trade tensions.

The kiwi was trading at 64.10 US cents at 8am in Wellington from 64.27 cents at 5pm in Wellington. The trade-weighted index was at 70.63 versus 70.74.

“US-China trade war woes are once again creeping back into global market sentiment,” said ANZ FX/rates strategist Sandeep Parekh.

While both sides appear to be on track to signing an interim agreement – despite the cancellation of the APEC meeting in Chile – “Chinese officials have reportedly voiced their low expectations that negotiations beyond phase one will result in any meaningful change in trade relations,” Parekh said.

Bloomberg News reported that private conversations with trade advisors in Beijing had revealed they remain concerned about Trump’s impulsive nature and the risk that he may back out of even a limited deal at the last minute.

However, while the kiwi is under some pressure it is holding above 64 US cents as the market pulls back on expectations the central bank might cut rates this month, said Parekh. 

The kiwi jumped yesterday after Westpac Bank said it didn't expect the RBNZ to cut rates this month, citing stronger domestic inflation and a pick-up in housing activity.

Parekh said the focus will now shift to US jobs data due later in the global trading day.

The New Zealand dollar was at 93.02 Australian cents from 92.76, at 49.55 British pence from 49.69, at 57.49 euro cents from 57.53, at 69.21 yen from 69.81 and at 4.5113 Chinese yuan from 4.5240 yuan.

(BusinessDesk)



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