NZ dollar weighed by ongoing US-China trade jitters

Monday 5th August 2019

The New Zealand dollar remains under pressure as trade jitters continue to weigh on global risk appetite.

The kiwi was trading at 65.28 US cents at 8am in Wellington from 65.40 late Friday in New York. The trade-weighted index was at 72.25 points from 72.38.

Trade war concerns were rekindled after US President Donald Trump announced plans to impose additional tariffs on $300 billion of Chinese imports on Sept 1. Chinese state media has expressed pessimism about whether trade talks with the United States should continue after Trump's last move, according to the South China Morning Post. Meanwhile, markets are waiting for an official reaction.

"China has declared they won't take this round of tariffs lying down, but haven't stated what form retaliation might take," said Kiwibank trader Mike Shirley. He said sentiment was also weighed by US jobs data.

While the US Labor Department report showed nonfarm payrolls increased by 164,000 jobs last month, in line with economists’ expectations, there were downward revisions to the past two months. "On balance it wasn't good or bad . The market, in the light of all the tariffs issues, focused on the negative aspects," he said.

Looking ahead, key events this week will be the Reserve Bank of Australia rate review Tuesday, followed by the Reserve Bank of New Zealand's review on Wednesday.

"The market is certain that the RBNZ will cut the OCR by 25 basis points to a record low of 1.25 percent but is not convinced that the RBA will do the same," said ANZ FX/rates strategist Sandeep Parekh. He expects the New Zealand central bank to leave the door open to more cuts as he expects another cut in November.

The New Zealand dollar was at 96.07 Australian cents from 96.11, unchanged at 53.79 British pence, at 58.77 euro cents from 58.87, at 69.57 yen from 69.70 and at 4.5296 Chinese yuan from 4.5379.

(BusinessDesk)

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