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NZ dollar rises to highest in almost a month as Italy fears ease, trade returns to focus

Friday 1st June 2018

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The New Zealand dollar rose to its highest level in almost a month as fears about Italy's political crisis eased, helping lift the euro, and the US stoked concerns about a trade war with steel tariffs for Canada, Mexico and the European Union.

The kiwi dollar traded at 69.98 US cents as at 8am in Wellington and earlier reached 70.23 cents, the highest since May 8, from 69.84 cents late yesterday. The trade-weighted index gained to 73.45 from 73.26.

The leader of Italy's Five Star Movement, Luigi Di Maio, and League leader Matteo Salvini said on Thursday that they had reached an agreement on terms for forming a new government, while nominating Giuseppe Conte as prime minister, even though Italian president Sergio Mattarella has already nominated Carlo Cottarelli, a former IMF official, to that role. Meanwhile, US Commerce Secretary Wilbur Ross said NAFTA talks haven't made enough progress for Mexico and Canada to avoid tariffs on steel and aluminium, which will be imposed at rates of 25 percent and 10 percent respectively. The tariffs also apply to the EU and quota limits will be imposed on other nations.

"The ‘will they or won’t they’ on US tariffs has flipped backed to ‘will’," said Sharon Zollner, chief economist at ANZ Bank New Zealand, in a note. "However, there have been only modest currency impacts so far, perhaps as Italy looks as though it has managed to form a more euro-friendly government. The kiwi is proving resilient and looks biased higher near-term."

In New Zealand today, traders will watch for the ANZ consumer confidence index for May and terms of trade for the first quarter.

In the US on Friday, non-farm payrolls is expected to show the world's biggest economy added 190,000 jobs in May, up from 164,000 in the previous month, while the unemployment rate held at 3.9 percent and average hourly earnings rose 2.6 percent year-on-year, unchanged from the rate in the previous month.

 The kiwi rose to 92.51 Australian cents from 92.38 cents late yesterday. It traded at 59.87 euro cents from 59.85 cents. The kiwi rose to 76.14 yen from 75.85 yen and gained to 4.4854 yuan from 4.4722 yuan. It rose to 52.64 British pence from 52.50 pence.

(BusinessDesk)



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