Sharechat Logo

NZ dollar gains as doubts about Trump's tax reforms weigh on greenback

Friday 29th September 2017

Text too small?

The New Zealand dollar rose as doubts US President Donald Trump's economy-boosting tax reforms will easily pass into law weighed on the greenback.

The kiwi rose to 72.31 US cents as at 8am in Wellington from 71.92 cents late yesterday. The trade-weighted index rose to 76.26 from 76.03.

Trump this week proposed the biggest US tax overhaul in three decades, offering to lower the corporate income tax and reduce the top income tax rate for individuals as well as cut taxes for small businesses but gave little detail how he plans to plug the budget shortfall it would create. Overnight, US second-quarter economic growth was revised up to an annualised 3.1 percent and eurozone economic confidence beat expectations with a reading of 113.

"Trump’s tax plan is out, but is lacking details, so markets do not have a lot to go on," said Cameron Bagrie, chief economist at ANZ Bank New Zealand, in a note. "But the key question is how do you fund an additional US$1.5 trillion over a decade without materially increasing the deficit and national debt? That alone sets up a huge battle in Congress."

With bets on a third rate hike by the Federal Reserve this year now at 70 percent, while the Reserve Bank yesterday reiterating interest rates are on hold, the kiwi still has more scope to decline, he said.

"Fed speakers have been universally upbeat and the data is printing above trend," he said. "It all points to higher US rates and an erosion of the yield advantage that has long supported the NZD."

Traders are looking ahead to US PCE deflator figures tonight along with consumer prices for the eurozone. In New Zealand today, building permits for August may provide more proof the housing market is cooling, while Japan has August CPI data and China is scheduled to release the Caixin PMI manufacturing series for September.

The kiwi traded at 61.34 euro cents from 61.31 cents and at 53.78 British pence from 53.76 pence. It traded at 81.27 yen from 81.28 yen, advanced to 92.04 Australian cents from 91.92 cents and gained to 4.8152 yuan from 4.7879 yuan.



NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar holds gains on improved dairy, bank capital outlook
MARKET CLOSE: NZ shares gain; banks rally on Reserve Bank capital decision
NZ dollar rises; bank capital rules less harsh than expected
RBNZ relaxes capital requirements, allows preference shares, extends phase-in
NZ dollar extends gain amid mixed US data, possible trade progress
MARKET CLOSE: NZ shares dip on eve of major regulatory decisions
NZ dollar sees off global headwinds, holds above 65 US cents
NZ dollar holds above 65 US cents; dairy auction prices mixed
Dairy index falls on weaker butter, milk fat demand
MARKET CLOSE: NZ shares join global decline; US tariff move weighs on exporters

IRG See IRG research reports