Thursday 2nd August 2018
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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.
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