Sharechat Logo

NZ dollar rises from 2-year low at start of third quarter on EU deal, weaker greenback

Monday 2nd July 2018

Text too small?

The New Zealand dollar rose from a two-year low after European Union leaders announced restrictions on migrants, boosting the euro and weighing on the greenback. 

The kiwi dollar traded at 67.72 US cents as at 8:30am in Wellington from 67.64 cents in late New York trading on Friday. It sank as low as 67.34 cents last week, the lowest since June 2016. The trade-weighted index rose to 72.35 from 72.21.

The 28 EU leaders agreed to set up migrant processing centres and take collective responsibility for the flood of people from the Middle East and Africa heading to the regional economic bloc. The euro gained on speculation the migrant measures would shore up German Chancellor Angela Merkel's support base although over the weekend, conservatives within her coalition dismissed the agreement as ineffective. US data was mixed on Friday, with a stronger than expected Chicago PMI, while in New Zealand, economists have dialled back their expectations for any rate hike by the Reserve Bank.

"EUR rose sharply and this spilled over into other currencies, with traders taking up the opportunity to close short positions," said Jason Wong, a currency strategist at Bank of New Zealand. "The USD seemed to be the main casualty and it lost further ground in Friday night trading. The weekend news could see some of this price action reverse course as the new week begins."

The kiwi rose to 58.20 euro cents from 58.02 cents on Friday in New York.

With no economic data scheduled in New Zealand today, traders may seek leads from Japan's Tankan survey for the second quarter and China's Caixin PMI manufacturing survey.

Following the Reserve Bank's decision to keep the official cash rate unchanged at 1.75 percent last week, traders deemed the bank "had kept an open mind about a possible easing," Wong said. And the market was now not pricing in a full rate hike until March 2020 "some five months out compared to pre-OCR review pricing".

The local currency rose to 91.53 Australia cents from 91.29 cents on Friday in New York and gained to 4.4811 yuan from 4.4732 yuan. It was little changed at 74.83 yen from 74.84 yen and traded at 51.45 British pence from 51.30 pence. 


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares gain as Trade Me hits record on takeover
NZ dollar higher against USD as jitters about China-US trade tensions recede
Rakon boosts bank funding to meet increased telco demand
Underfunded Overseer farm management tool needs thorough review: Upton
Motor vehicle lending helps UDC lift annual profit 6%
Orr says RBNZ still under-resourced, funding model part of second phase of review
Leading business brokerage firm LINK raises a further NZ$3.45m in capital
Travel insurance and the AirNZ strike
Industrial heat a challenge for cost-effective emissions reduction
Hallenstein Glasson wary of margin squeeze in second half

IRG See IRG research reports