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NZ dollar eases as markets fret about US-China trade talks

Tuesday 15th October 2019

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The New Zealand dollar eased slightly on ongoing uncertainty around US-China trade talks.

The kiwi was trading at 62.98 US cents at 8am in Wellington from 63.12 cents at 5pm yesterday. The trade-weighted index was at 69.96 from 70.03.

Global risk appetite had ticked up on news that China and the US had reached a "partial deal." According to Reuters, however, the mood soured after China indicated further talks were needed and US Treasury Secretary Steven Mnuchin said the next round of tariffs on Chinese imports are on track to take effect on Dec. 15 if a deal has not been reached by then.

“Opinion remains mixed as to whether the Chinese offer this week to buy additional US agricultural goods and the US decision to suspend additional tariffs represents the beginning of actual, real progress, or is merely a plaster as US elections get closer,” said ANZ Bank FX/rates strategist Sandeep Parekh.

Risk appetite was also dented by news of the Turkish military advance into Syria, in particular after US President Donald Trump tweeted “Big sanctions on Turkey coming!”.

Closer to home, investors will be watching for minutes from the Reserve Bank of Australia’s latest meeting, due for release at 1:30pm New Zealand time. 

The next major risk event for the kiwi is tomorrow’s third-quarter domestic inflation data, as investors weigh up whether the central bank will cut rates again in November.  

The official cash rate is currently at a record low 1 percent and in September the central bank said that scope remained for "more fiscal and monetary stimulus, if necessary, to support the economy and maintain our inflation and employment objectives.” The RBNZ is widely expected to cut the rate again next month.

Economists expect the consumers price index rose 0.6 percent in the latest quarter, taking the annual rate to 1.4 percent, down from 1.7 percent in the June quarter.

The kiwi was trading at 92.92 Australian cents, unchanged from late yesterday. 

It was trading at 50.04 British pence from 50.07, at 57.07 euro cents from 57.21, at 68.23 yen from 68.35, and at 4.4486 Chinese yuan from 4.4481.



DISCLAIMER: To the extent that any of the content above constitutes advice, it is general advice that has been prepared without reference to investor’s objectives, financial situation or needs. Before acting on any advice, investors should consider the appropriateness of the advice and IRG recommend that investors should obtain appropriate financial, legal and taxation advice before making any financial investment decision. The report is based on information compiled from public information and private research. IRG have completed the report on a best endeavours basis and do not accept any liability of loss or damage. IRG suggest that clients use this as part of a decision making process and check key data before making any investment decisions.
Employees may have an interest in the securities discussed in this report.

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