NZ dollar heads for 1.5% weekly gain as trade, geopolitical tensions ease

Friday 13th April 2018

The New Zealand dollar is heading for a 1.5 percent gain against the greenback this week as investors' jitters over a possible global trade war and a US attack against Syria abated, stoking risk appetite.

The kiwi rose to 73.72 US cents as at 5pm in Wellington from 73.58 cents yesterday and was up from 72.62 cents late last Friday in New York. The trade-weighted index rose to 75.60 from 75.43.

Investor sentiment improved across Asia at the end of the week after US President Donald Trump backtracked on his suggestion of an imminent missile attack on Syria and asked his trade advisers to examine how the US can rejoin the Comprehensive and Progressive Trans-Pacific Partnership - a deal he withdrew from in one of his first acts as president.

"The kiwi has been quietly bid all week long," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. The kiwi remains firm against the Australian dollar as "our commodity prices are holding up, Australia's aren't. New Zealand's terms of trade are a lot better," he said. The kiwi traded at 94.84 Australian cents from 94.95 cents late yesterday.

Kelleher said he is not seeing much offshore buying of bonds so "it appears to be just currency buyers."

New Zealand's two-year swap rate lifted 2 basis points to 2.30 percent and the 10-year swap rate rose 5 basis points to 3.15 percent.

Looking ahead, Kelleher said investors will be watching for next week's dairy auction and domestic inflation data. Economists expect the data to show a 0.5 percent lift in quarterly inflation and for annual inflation to be running at 1.1 percent, according to a Bloomberg poll.

Investors will also be watching results in the latest US corporate earnings season.

The kiwi rose to 79.16 yen from 78.68 yen yesterday as investors turned away from safe-haven currencies on improving risk appetite. The New Zealand dollar gained to 59.79 euro cents from 59.53 cents. It traded at 51.80 British pence from 51.91 pence and rose to 4.6382 yuan from 4.6181 yuan.

(BusinessDesk)

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