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NZ dollar down on US-China trade war worries

Friday 15th March 2019

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The New Zealand dollar fell on news that the US and China likely won't be inking a deal to end their trade war this month.

The kiwi traded at 68.16 US cents at 8am in Wellington from  68.40 US cents at 5pm. The trade-weighted index was at 74.03 from 74.22.

Markets were jittery after Bloomberg reported that a meeting between President Donald Trump and President Xi Jinping is more likely to happen in April at the earliest.  "Risk sentiment took a hit," said ANZ Bank FX.Rates strategist Sandeep Parekh. 

The kiwi was trading at 51.51 British pence from 51.60 British pence after British MPs voted by 412 to 202 for Prime Minister Theresa May to ask the European Union for a delay to Brexit. Britain's Parliament now has to formally request an extension and it will have to be unanimously approved by the 27 EU leaders.

"This pair will remain volatile as the vote on extending the Brexit deadline nears," said Parekh.

"The length of the extension is key," he said. "If politicians agree to the deal that May has previously tabled then only a short extension will be required, whereas a new plan will require a significant extension and therefore heighten the risk that Brexit will actually happen."

Looking ahead, he said domestic BusinessNZ PMI data and migration data for January will provide some direction for the kiwi. Outside of New Zealand, investors will be watching for new home prices in China and the Bank of Japan's interest rate review. 

The New Zealand dollar traded at 60.32 from 60.41 euro cents. It was at 76.17 yen from 76.27 yen and at 4.5816 from 4.5894 Chinese yuan. It traded at 96.50 Australian cents from 96.80.

(BusinessDesk)

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