NZ dollar jumps after Trump signals progress on China trade

Friday 2nd November 2018

The New Zealand dollar was sharply higher against the US dollar after President Donald Trump signaled progress on its trade dispute with China.

The kiwi traded at 66.57 US cents at 8am in Wellington versus 65.74 US cents yesterday. The trade-weighted index was at 72.73 from 72.07.

"Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!," Trump said on Twitter.

"NZD surged higher overnight, smashing through resistance," said ANZ Bank economist Miles Workman. Trump's comments were also "mirrored" in China with Xi Jinping reportedly open to the discussions at the upcoming G-20 meetings in Argentina, which added to the market's risk-on sentiment, Workman said.

Stuart Ive, senior dealer foreign exchange at OMF in Wellington, said more details will be needed on the US-China trade situation for the kiwi to hold around these levels markets. The G-20 meeting begins late November.

Investors will also now be shifting their attention to next week's monetary policy review at New Zealand's central bank, he said. While the central bank is widely expected to keep rates on hold at 1.75 percent, the focus will be on whether it reiterates that a rate cut is still possible.

The kiwi traded at 92.38 Australian cents from 92.31 cents yesterday.

It rose to 4.6070 Chinese yuan from 4.5575 yuan and traded at 75.02 yen from 74.06 yen. It was at 58.36 euro cents from 57.67 cents yesterday.

The kiwi traded at 51.14 British pence from 51.15 British pence after the Bank of England held its policy rate at 0.75 percent but hinted toward a slightly faster pace of tightening under its assumed orderly Brexit scenario.

(BusinessDesk)

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