NZ dollar dips as China criticises US protectionism

Tuesday 25th September 2018

The New Zealand dollar slipped as China accused the US of intimidating other nations with its trade policy.

The kiwi declined to 66.40 US cents as at 8am in Wellington from 66.69 cents yesterday. The trade-weighted index decreased to 71.94 from 72.20.

China yesterday released a white paper saying trade relations between the world's two biggest economies were of "great significance" for the wider global economy. However, US President Donald Trump's 'America First' policy "brazenly preached unilateralism, protectionism and economic hegemony" and attempted to intimidate countries through economic pressures such as tariffs to impose US interests on other nations.

The deteriorating trade relationship between the two nations has seen a series of tariffs imposed. The latest round covering US$200 billion of Chinese products and US$60 billion of US goods came into effect yesterday. Over the weekend, China called off trade talks planned for next week and is unlikely to sit down with Washington officials until after the November mid-term elections.

"It has been a fairly sleepy start to the week, with the NZD and AUD on a slightly softer note, not helped by lingering US-China trade war concerns," Bank of New Zealand senior markets strategist Jason Wong said in a note.

The greenback has also been supported by rising yields on US bonds, with the US 10-year Treasury up 1.5 basis points to 3.08 percent, just shy of the seven-year high reached in May. New Zealand's 10-year government bond was recently at a yield of 2.69 percent.

No local data are scheduled for today but an Australian consumer confidence survey will attract some attention. The New Zealand dollar was little changed at 91.54 Australian cents from 91.72 cents yesterday.

The kiwi traded at 56.62 euro cents from 56.77 cents yesterday after European Central Bank president Mario Draghi reiterated his expectation for solid growth and accelerating core inflation over the medium term. The local currency declined to 50.62 British pence from 50.99 pence.

The New Zealand dollar decreased to 74.88 yen from 75.06 yen yesterday and fell to 4.5530 Chinese yuan from 4.5722 yuan.

(BusinessDesk)

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