Tuesday 25th June 2019
|Text too small?|
The New Zealand dollar firmed on strong domestic trade data and after the greenback lost further ground when US President Donald Trump asserted that he has the power to remove the head of the US Federal Reserve.
The kiwi was trading at 66.47 US cents at 5pm in Wellington versus 66.16 at 8am. The trade-weighted index was at 72.53 from 72.20.
The kiwi got a lift after Stats NZ reported a wider-than-expected May trade surplus thanks to record exports. Exports reached $5.8 billion in May, up 8.5 percent from a year earlier, while imports rose 7.6 percent to $5.5 billion. The May trade surplus was $264 million. Economists polled by Bloomberg had expected $200 million.
The currency then jumped following comments from Trump regarding his ability to remove Federal Reserve chairman Jerome Powell if he thinks that is the appropriate course of action. Trump has been upping the pressure on Powell to cut interest rates to help stimulate the economy
In an exclusive interview with The Hill, Trump said Powell is "incorrect" that he is entitled to serve a four-year term that expires in 2022. Asked if he thinks he has the power to remove Powell, Trump said "If I wanted to, but I have no plans to do anything.”
"That came around lunch time and it really kicked the kiwi off," said Mike Shirley, a dealer at Kiwibank. "The kiwi is sort of a win by default as the US dollar is coming off because of the potential risks," he said.
The kiwi fared better than the Australian dollar and was trading at 95.50 Australian cents from 95.03 cents this morning.
Shirley said markets are now waiting for tomorrow's rate decision at the Reserve Bank of New Zealand. All 20 economists surveyed by Bloomberg expect the official cash rate to stay on hold at 1.50 percent but Shirley noted markets are pricing in a 20 percent chance of a cut. "There's a one in five chance of a cut tomorrow. It seems unlikely but historically they have cut on these market odds," he said.
The New Zealand dollar was trading at 52.12 British pence from 51.93 British pence, at 58.26 euro cents from 58.06, at 71 yen from 70.97, and at 4.5741 Chinese yuan from 4.5458.
The New Zealand two-year swap rate firmed to 1.2951 percent from 1.2885 late yesterday, while the 10-year swap rate eased to 1.7375 percent from 1.74.
NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.
No comments yet
Xero chair to retire early as family’s health comes first
Business leaders quiz finance minister on capacity to spend $12b
House prices are accelerating again, even in Auckland
13th December 2019 Morning Report
Tourists still coming but growth is slowing
Peters backs StuffME merger bid
Supplements, skincare firm poised for reverse listing
NZX, EEX eye carbon auction opportunity
A2 Milk boss steps down, shares fall 7.7%
NZX says operating earnings will reach top of guidance