Sharechat Logo

NZ dollar pushed and pulled by delayed US tariffs, poor China data

Wednesday 14th August 2019

Text too small?

The New Zealand dollar was little changed after worse-than-expected Chinese economic data tempered early enthusiasm after US President Donald Trump said he would delay tariffs on imports of some consumer goods from China.

The kiwi was trading at 64.58 US cents at 5pm in Wellington from 64.53 at 8am. The trade-weighted index was at 71.72 points from 71.71.

Trump had said that he will delay tariffs on goods including laptops, cell phones, footwear and clothing to protect US shoppers “for the Christmas season,” appearing to contradict his own assertions that China is paying the existing tariffs, not US consumers.

Trump said his decision came after “a very good call” with China and that the tariffs intended to kick in from Sept. 1 would be deferred until Dec. 15. According to The Wall Street Journal, the backdown affects about US$156 billion of the US$200 billion targeted for the new 10 percent tariffs.

The move triggered a relief rally in US stocks as well as improving the appetite for the Australian and New Zealand dollars.

But data then showed China’s industrial output in July was up 4.8 percent year-on-year, a 17-year low and well below consensus forecasts for 6 percent growth. Output had risen 6.3 percent in June.

Other Chinese data was equally gloomy. Retail sales in July were up 7.6 percent against expectations of an 8.6 percent increase and down from 9.8 percent in June.

China is the largest trading partner of both Australia and New Zealand, while Australia is New Zealand’s second-largest.

“There was a bit of a sell-off in the Australian dollar and the kiwi dollar followed suit, but it was taken back soon after,” says Imre Speizer, currency strategist at Westpac.

“The bigger story was the overnight trade war de-escalation,” Speizer says.

Singapore-based VM Markets managing partner Stephen Innes says the reaction to Trump’s back-down shows how starved financial markets are of good news.

“After being stuck in trade war purgatory and starved of positive news of late, any glimmer of optimism or agreement on practically anything on the trade war front is viewed favourably,” Innes says.

The New Zealand dollar was trading at 95.05 Australian cents from 94.95, at 53.56 British pence from 53.50, at 57.79 euro cents from 57.75, at 68.81 yen from 68.83 and at 4.5310 Chinese yuan from 4.5433.

The New Zealand two-year swap rate edged up to a bid price of 0.9641 percent from yesterday’s close at 0.9570. The 10-year swap rate rose to 1.2900 percent from 1.2675.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
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:

COMMENT: ANZ still doesn't get it
FMA says ANZ should have reported Hisco house sale in financial statements
ANALYSIS: Another new head for Xero's American dream
Jetstar losing money on regional NZ services, watching market 'closely'
A2 Milk says rising environmental costs not a 'big risk'
Cavalier Corp shares fall 16% as it announces write-down
Twyford's choice: NZTA or Super Fund for Auckland light rail
Auckland Airport boss upbeat about future but warns against complacency
NZ Shareholders' Association to oppose Stride's directors' fee bump
Sky TV cans dividend, writes off $670m ahead of rights battle

IRG See IRG research reports