Friday 29th June 2018
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The New Zealand dollar is heading for a 1.9 percent weekly decline after touching a fresh two-year low in Asian trading but got a late bounce after European Union leaders agreed to set up joint asylum processing sites and restrict migrants’ moves within the bloc.
The kiwi fell as low as 67.36 US cents and was trading at 67.76 cents as at 5pm in Wellington from 67.52 cents at 8am and 67.80 cents yesterday. It traded at 69.06 last Friday. It shed 6.5 percent over the quarter. The trade-weighted index fell to 72.42 from 72.61 late yesterday.
The local currency remained under pressure after the Reserve Bank kept rates at a record low 1.75 percent Thursday and continued to leave the door open for a possible cut as downside risks increase. However, it benefited from some US dollar selling when European leaders reached an agreement on migration after nine hours of negotiation. “All the measures in the context of these controlled centres, including relocation and resettlement, will be on a voluntary basis,” said the leaders’ joint statement, according to Reuters. The 28 EU leaders also agreed to tighten their external border more, increase financing for Turkey, Morocco and Northern African states to prevent migration to Europe.
"It (the kiwi) has certainly had a lot of downside momentum after yesterday but it got a bit of a reprieve late in the day after the euro meeting finally yielding result," said Ross Weston, a senior trader at Kiwibank.
He said, however, with few catalysts to push it much higher it is likely to continue to oscillate between 67 US cents and 68 cents and Weston said the backdrop of ongoing trade tensions could push it around.
The US administration is due to activate US tariffs on Chinese goods worth US$34 billion on July 6, which is expected to prompt a tit-for-tat response from Beijing.
The local currency fell to 91.70 Australian cents from 92.14 cents yesterday and declined to 4.4791 Chinese yuan from 4.4842 yuan. It rose to 74.99 from 74.79 yen yesterday and traded at 51.65 British pence from 51.72 pence. The kiwi fell to 58.12 euro cents from 58.64 cents yesterday.
New Zealand’s two-year swap rate declined 1 basis point to 2.14 percent while 10-year swaps fell 1 basis point to 3.01 percent.
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