Sharechat Logo

NZ dollar falls as escalating trade war weighs on risk appetite

Thursday 2nd August 2018

Text too small?

The New Zealand dollar was weaker against the greenback in jittery markets after the US stepped up pressure on China in the latest round of the global trade spat between the two nations.

The kiwi traded at 67.75 US cents as at 5pm in Wellington versus 67.86 cents at 8am, down from 67.91 cents yesterday. The trade-weighted index was at 72.98 from 73.07.

The New Zealand dollar was weighed down when the US administration increased pressure on China by proposing a higher 25 percent tariff on US$200 billion worth of Chinese imports, adding to concerns the US-China trade war will soon start impacting other markets. China is New Zealand's largest trading partner, so any slowdown in that economy could potentially impact domestic exports. 

“There is some risk off driving it down today,” said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

Kelleher also said domestic factors are weighing on the kiwi, such as news yesterday that Ebert Construction was tipped in receivership and farmer confidence slipped to a six-year low.

“It just can’t rally ... it's looking a bit forlorn,” he said. Kelleher said the currency has support at 67.50 US cents and resistance around 68.20 US cents to 68.50 cents.

Looking ahead, he said the jobs data in the US Friday will be key. According to a Reuters survey of economists, nonfarm payrolls likely increased by 190,000 in July after advancing by 213,000 positions in June.

The data should “be a good number, given the data prints of late,” and that will further support the US dollar, said Kelleher. 

The kiwi traded at 91.77 Australian cents from 91.61 cents yesterday. It was at 51.71 British pence from 51.82 pence yesterday and was at 58.16 euro cents from 58.15 cents.

The local currency fell to 75.62 yen from 76.01 yen yesterday and slipped to 4.6179 Chinese yuan from 4.6298 yuan yesterday.

New Zealand's two-year swap rate was unchanged at 2.13 percent while 10-year swaps were up 1 basis point to 3.05 percent.


  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:

ASB reviews ownership of Aegis
Auckland Airport kicks off next phase of expansion
Cashed-up Plexure eyes acquisitions to accelerate growth as loss shrinks
Tower turns to 1H profit, lifts FY guidance
IRD should have doubled claim against Watson's Cullen Group - Professor
Investore FY profit falls 16% on smaller valuation gain, signals flat dividend for 2020
Synlait receives cease and desist letter regarding Pokeno plant
21st May 2019 Morning Report
NZ dollar steady ahead of central bank speeches
Auditors need to come out of the shadows and explain the value they add: FMA

IRG See IRG research reports