Monday 24th April 2017
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The New Zealand dollar ticked up against the US dollar on global relief after French centrist politician Emmanuel Macron and the far-right Marine Le Pen made it through the first round of the presidential election, although it lost ground against the euro.
The kiwi rose to 70.33 US cents at 5pm in Wellington from 70.19 cents on Friday in New York and dropped to 64.76 euro cents from 65.53 cents as markets were cheered by the result in France, with Macron widely tipped to win the final vote. The election result saw the euro briefly touch US$1.0940, the highest since November, and Reuters reported opinion polls put Macron ahead by more than 20 points, a lead so large that a repeat of the Brexit surprise is seen as highly unlikely.
The US dollar, meanwhile, remained under pressure amid scepticism regarding US President Donald Trump's fiscal stimulus promises and "the weakening US dollar is pushing NZD/USD higher, targeting the 71.00 area this week. Also helping are rising dairy prices, higher inflation, and extremely short speculative NZD positioning," said Westpac Banking Corp senior FX strategist Imre Speizer in a note. Trump has reportedly said the White House will unveil a "massive tax cut" but didn't give more details.
Trading was extremely quiet today and "liquidity wasn't helped by the fact that we are between Sunday and Anzac Day (a national holiday in both New Zealand and Australian) so a lot of people aren't here today," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank "If you weren't trading the euro against the US, sterling or the yen, you wouldn't have needed to come to work today," he said.
The kiwi will likely continue to benefit from improving risk appetite, with most equity market futures looking stronger overnight, said Kelleher. He noted investors will be watching for any Trump-related headlines, particularly as the president was due to call Chinese President Xi Jinping after talking with Japanese Prime Minister Shinzo Abe earlier on Monday amid fears North Korea could conduct another nuclear test.
The kiwi traded at 54.94 British pence from 54.87 pence last week. It rose to 77.40 yen from 76.69 yen, also helped by improving risk appetite. It was trading at 93.04 Australian cents from 93.20 cents on Friday. The trade-weighted index was at 76.24 from 76.34 last week. The kiwi increased to 4.8424 Chinese yuan from 4.8405 yuan last week.
New Zealand's two-year swap rate rose 2 basis points to 2.33 percent and 10-year swaps gained 5 basis points to 3.37 percent.
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