Thursday 30th May 2019
|Text too small?|
The New Zealand dollar weakened on ongoing concerns that US-China trade tensions will cool global growth and as investors fret that China could use its rare earth resources as leverage in the dispute.
The kiwi was trading at 65.11 US cents at 7:50am in Wellington from 65.42 at 5pm. The trade-weighted index was at 71.90 points from 72.18..
Markets were jittery after China signaled it could restrict the export of rare earth minerals to the US. Rare earths are used in production in a huge number of sectors, including renewable energy technology, oil refining, electronics and the glass industry. According to Capital Economics, if China follows through on the threat offshore rare earth prices would likely jump as China accounts for more than 90 percent of global production.
"A global risk-off tone coupled with escalating trade tensions saw the kiwi lose ground as markets fled to safe haven assets," said ANZ FX/rates strategist Sandeep Parekh. "Ongoing US-China trade tensions will continue to create turbulence for the kiwi," he added.
Domestically the focus will be on the government budget - due for release at 2pm. Parekh expects it will show the government's books are in a "healthy position."
"There should be enough room for the government to meet its 20 percent debt objective, despite a slightly softer economic outlook driving a small deterioration in the fiscals."
The budget release has been overshadowed by a leak of sensitive budget information earlier this week. Police, however, have determined that the Treasury's computer system was not 'hacked'.
National Party leader Simon Bridges is expected to detail how the National Party came by the information as speculation mounts that the party gained access to a Treasury website that was being set up privately to house Budget information. A parliamentary IP address was among those found to have accessed a 'cloned' Treasury website where Budget materials were being uploaded in what was meant to be a private environment.
The New Zealand dollar was at 94.12 Australian cents from 94.42, at 51.56 British pence from 51.67, at 58.48 euro cents from 58.59, at 71.37 yen from 71.47 and at 4.5016 Chinese yuan from 4.5237.
No comments yet
Deposit protection reduces case for RBNZ's bank capital increases, Robertson hints
NZ dollar higher after Lowe comments viewed as less dovish
Govt to introduce deposit insurance; RBNZ keeps prudential supervision
Granular approach needed for cost-effective emissions reduction
Bank executive incentives a key focus for regulators
Appeal Court puts ANZ back in the gun over interest rate swaps
Meridian to supply Australian online retailer Kogan.com
RBNZ seen keeping rates on hold but signalling more cuts to come
RBNZ demands assurance ANZ New Zealand is operating prudently
Citic gets seat at Tourism Holdings in $80 mln capital raising