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NZ dollar gains against most currencies as shares, commodities rise

Monday 15th April 2019

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The New Zealand dollar was steady against the US dollar and slightly higher against other major currencies on the back of rising equities and commodity markets.

As well, investors are growing more optimistic that China and the United States will soon reach an agreement to end their nine-month trade war.

The kiwi was trading at 67.72 US cents at 5pm in Wellington, unchanged from at 8am. The the trade-weighted index was at 73.29 points from 73.19.

“It’s risk-on across the board. Stocks are going higher – the US stock market had a great night on Friday – commodities are going higher, and both the kiwi and the Aussie have been dragged higher,” says Mitchell McIntyre, senior foreign exchange dealer at XE.

Positive data out of China, including a 14.2 percent rise in exports in March from a year earlier and strong lending figures, probably weren’t enough on their own to explain the more positive tone, McIntyre says.

“Trade negotiations coming along between the US and China have helped to support markets,” he says.

The latest news is that US negotiators have tempered demands that China curb industrial subsidies, marking a retreat on a core US objective for the trade talks, according to Reuters.

“It’s generally improved risk sentiment across the board and the kiwi and Aussie are benefitting,” McIntyre says.

But broadly speaking, the kiwi remains in a downtrend sparked by the Reserve Bank changing its stance in late March from neutral to expecting the next move in the official cash rate will probably be down, he says.

The outcome of the next Global Dairy Trade auction and the March quarter consumers price index, both due on Wednesday, could provide more evidence to either confirm or discount that scenario.

The market is expecting the CPI will have risen 0.3 percent in the quarter and 1.7 percent in the year ended March.

The New Zealand dollar was at 94.45 Australian cents from 94.18 and at 51.71 British pence from 51.68 It was at 59.87 euro cents from 59.84, at 75.79 Japanese yen from 75.70 and at 4.5429 Chinese yuan from 4.5332.  

The New Zealand two-year swap rate rose to 1.7 percent from 1.6662 on Friday while the 10-year swap rate edged up to 2.930 percent from 2.2450.

The two-year rate has lifted off its record low at 1.5475 on March 28, the day after the Reserve Bank changed its stance from neutral.

(BusinessDesk)

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