Monday 19th August 2019
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The New Zealand dollar is sticking to a tight range as global growth concerns continue to weigh on sentiment.
The kiwi was trading at 64.31 US cents at 8am in Wellington from 64.27 cents in New York on Friday. The trade-weighted index was at 71.54 from 71.49.
US data was disappointing Friday, with housing starts down 4 percent in July and the preliminary August release of the University of Michigan consumer sentiment down 6.3 points to 92.1.
However, sentiment may be helped after US President Donald Trump’s economic advisor Larry Kudlow talked down fears of an economic slowdown Sunday. “I don’t see a recession at all,” he said in an interview with Fox News.
Kudlow also said trade deputies from China and the US would speak within 10 days and “if those deputies meetings pan out...we are planning to have China come to the USA” to advance negotiations, according to Reuters.
Meanwhile, headlines that the German government is ready to deliver fiscal stimulus by boosting deficit spending should a recession hit saw the bund selloff on Friday, and added to fears that economies globally are slowing.
ANZ senior economic Miles Workman said that given the German economy already contracted in the second quarter and forward looking indicators are soft “it’s no wonder recession fears are elevated.”
He noted that New Zealand has plenty of fiscal headroom should the government choose to use it. “With a few recession warnings now being triggered across the globe, now seems like a good time to start planning on how best to deliver,” he said.
Looking ahead, markets will be watching for today’s BNZ-BusinessNZ performance of services index followed by minutes from the US Federal Reserve Wednesday in the US.
The New Zealand dollar was trading at 94.64 Australian cents from 94.78, at 52.93 British pence from 52.91, at 58.00 euro cents from 57.94, at 68.48 yen from 68.39 and at 4.5297 Chinese yuan from 4.5276.
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