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NZ dollar hovers below 65 US cents; trade tensions weigh on sentiment

Thursday 23rd May 2019

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The New Zealand dollar remained below 65 US cents as simmering China-US trade tensions continue to weigh on sentiment. 

The kiwi was trading at 64.94 US cents at 8am in Wellington from 64.97 at 5pm yesterday. The trade-weighted index was at 71.77 points from 71.81.

Ongoing trade tensions have heightened concerns about global growth and sentiment soured further overnight on media reports that the US administration is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision.

According to the New York Times, the move would mean that US companies would have to obtain government approval to supply components to Hikvision. It comes on the heels of the US Commerce Department blocking Huawei from buying US goods last week. 

"Risk sentiment and safe haven buying keeps the pressure on the kiwi as the currency breaks below 65 US cents and settles at a new low for 2019," said ANZ FX/rates strategist Sandeep Parekh. 

Minutes from the latest US Federal Reserve policy meeting had little market impact as "the key takeaway from the Fed’s May minutes was that a patient approach would be appropriate 'for some time,'" he said. 

The New Zealand dollar was trading at 51.28 British pence from 51.10 as Brexit woes continue to weigh on the British pound.

UK Prime Minister Theresa May resisted growing calls to resign overnight despite mounting opposition from lawmakers over the latest Withdrawal Agreement Bill, which offered a vote on whether to hold a second referendum.

"While there are no signs her departure is imminent, discussions are ongoing leaving the sterling, which fell for a record 13th day on the trot, in a precarious position in the meantime," Parekh said. 

The New Zealand dollar was trading at 94.39 Australian cents from 94.45, at 58.23 euro cents from 58.22, at 71.65 yen from 71.74 and at 4.4851 Chinese yuan from 4.4913

(BusinessDesk)

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