Sharechat Logo

NZ dollar gains as CPTPP deal reached; growing US protectionism weighs on greenback

Wednesday 24th January 2018

Text too small?

The New Zealand dollar gained as investors welcomed an agreement on the regional Asia-Pacific trade and investment pact, while growing US protectionism weighed on the greenback. 

The kiwi dollar rose to 73.60 US cents as at 5pm in Wellington from 73.43 cents at 8am and 73.22 cents yesterday. The trade-weighted index gained to 75.43 from 75.21 yesterday.

The local currency got a boost from news negotiators finalised the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership - or CPTPP -  agreement in Tokyo on Tuesday with the 11 nations in the trade pact due to sign it in Chile on March 8. That put it at odds with the US, where President Donald Trump announced new tariffs on some imported goods and stoking fears about the global trade environment, and adding to the greenback's negative outlook against a backdrop of low market volatility, higher global growth and increased appetite for risk. 

"The kiwi’s strong performance came after news that New Zealand, along with 10 other nations, has agreed to the new formation of the Trans-Pacific Partnership," said OFX Group in a note. 

ANZ Bank New Zealand senior economist Phil Borkin said "any signing of a free trade agreement is a positive," in particular after nerves yesterday when Trump raised tariffs on imports of washing machines and solar panels, raising fears about the White House's protectionist attitude.

However, the kiwi's strength is "really just a continuation of a US dollar weaker theme ... the US dollar cannot buy a friend at the moment," he said. 

Looking ahead, Borkin said the biggest risk for the kiwi will be tomorrow's fourth-quarter inflation data. Economists expect the consumers price index rose 0.4 percent in the three months ended Dec. 31, for an annual increase of 1.9 percent, according to the median in a poll of 13 economists surveyed by Bloomberg. 

"A softer CPI number could certainly knock the kiwi off its perch," said Borkin. 

The kiwi fell to 80.92  yen from 81.10 yen yesterday. The local currency rose to 91.99 Australian cents from 91.66 cents yesterday and gained to 4.7026 Chinese yuan from 4.6842 yuan. It increased to 52.43 British pence from 52.36 pence yesterday and traded at 59.76 euro cents from 59.73 cents.

New Zealand's two-year swap rate fell 1 basis points to 2.22 percent while the 10-year swaps fell four basis points to 3.25 percent.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
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:

NZ manufacturing activity chugs along in November
Australia's GWA lobs in $118M bid for Methven
Govt leaves door open for higher emissions price cap
Methven shares halted pending material transaction
Housing market continued cooling in November
ComCom nudges Fonterra towards greater transparency
Infratil forecast unaffected by delayed return from Longroad asset sale
December 14th Morning Report
NZ dollar trades in tight range as ECB confirms end to quantitative easing
MARKET CLOSE: NZ shares rise as optimism over US-China trade deal lingers; Fletcher gains

IRG See IRG research reports