NZ dollar gains against Aussie after Trump announces more tariffs on China

Friday 2nd August 2019

The New Zealand dollar gained against its Australian counterpart after US President Donald Trump tweeted plans to impose more tariffs on China.

The kiwi was trading at 96.41 Australian cents at 8am in Wellington from 95.72 at 5pm yesterday. It was at 65.50 US cents versus 65.57 cents and the trade-weighted index was at 72.49 points from 72.43 points.

US-China trade talks wrapped up without “fanfare” with the two sides slated to meet again in September, Kiwibank trader Mike Shirley said.

However, risk appetite took a hit when Trump said that on Sept. 1 the US will start putting a “small additional tariff of 10 percent” on the remaining US$300 billion of goods and products coming from China. Investors will now be waiting for any reaction from China.

"The departure from the ‘ceasefire’ has had a clear and profound effect on global markets," said OMF Treasury Manager Stuart Ive. Safe-haven gold lifted 2 percent and on the oil front, Brent was down 6.3 percent, said Ive.

The Australian dollar was particularly hard hit as commodity prices tumbled and given Australia’s economic links to China, said Shirley.

While the kiwi gained against the Aussie and held steady against the greenback it did fall against the safe-haven yen as risk appetite took a hit. It was at 70.41 yen from 71.57.

Looking ahead, the focus will now be on the US jobs data later today.

The kiwi was at 54.01 British pence from 54.04, at 59.15 euro cents from 59.32, and at 4.5239 Chinese yuan from 4.5227.

(BusinessDesk)

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