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NZ dollar dips back below 69 US cents, focus shifting to RBNZ

Friday 22nd March 2019

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The New Zealand dollar fell back below 69 US cents after better-than-expected US data and uncertainty over US-China trade and Brexit.

The kiwi was trading at 68.72 cents at 8am in Wellington versus 69.12 US cents at 5pm in Wellington. The trade-weighted index was at 74.36 from 74.58.

The greenback gained some traction when the US March Philadelphia Fed index rose to 13.7 versus -4.1 in February, said ANZ Bank FX/Rates strategist Sandeep Parekh.  Appetite for riskier assets like the New Zealand dollar was also dented when US President Donald Trump said his administration was considering leaving tariffs on China for a "substantial period".

Meanwhile, Prime Minister Theresa May is back in Brussels trying to obtain an extension to the March 29 Brexit deadline. "But Europe’s position seems to have hardened, with various politicians including French President Emmanuel Macron indicating that the Withdrawal Agreement must be passed for an extension to be granted. Sterling came under pressure," said Parekh.

This week’s EU Summit is unlikely to be the final word, he said. There could be an emergency EU Brexit Summit next week and the UK Parliament is likely to vote on the Withdrawal Agreement again next week. 

The kiwi traded at 52.56 British pence from 52.34 yesterday.

Domestically the focus is now on the Reserve Bank's monetary policy decision next Wednesday. News the economy expanded 0.6 percent in the fourth quarter added to the view that the central bank is unlikely to change its messages. It is widely expected to keep rates on hold at a record low 1.75 percent and reiterate the next move could be up or down. 

The New Zealand dollar was trading at 96.69 Australian cents from 96.70, at 60.51 euro cents from 60.52, at 76.12 yen from 76.37 and at 4.6003 Chinese yuan from 4.6192.

(BusinessDesk)



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