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NZ dollar dips from 13-day high as US holiday keeps markets quiet

Tuesday 19th February 2019

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The New Zealand dollar slipped from a 13-day high after failing to break above 69 US cents. Trading is relatively muted with US markets closed for the Presidents' Day holiday. 

The kiwi fell from as much as 68.93 US cents and was trading at 68.48 cents as at 8am in Wellington from 68.83 cents yesterday. The trade-weighted index decreased to 74.30 from 74.59. 

European equity markets were mixed in relatively quiet trading, with Wall Street closed for the holiday. Asian markets had been buoyed on Monday by optimism over last week's US-China trade talks, however, a US Commerce Department recommendation on whether to impose tariffs on auto imports reignited fears over US trade protectionism. 

"Headlines that Donald Trump has received advice that auto imports may represent a threat to national security has added fresh uncertainties around the trade protectionism saga," ANZ Bank New Zealand economists Miles Workman and Sandeep Parekh said in a note. "Despite the optimism around US-China trade, the kiwi ran into some headwinds overnight as it tested 69 US cents before consolidating."

No local data is scheduled today, although minutes from the Reserve Bank of Australia's last policy meeting will be watched. The kiwi declined to 96.03 Australian cents from 96.30 cents yesterday. 

The British pound rose 0.3 percent to US$1.2924 per pound after a group of anti-Brexit Labour Party MPs said they would quit their party and sit as independents. UK Prime Minister Theresa May has so far failed to gain support for her transition plan when Britain leaves the European Union. 

Bank of New Zealand senior markets strategist Jason Wong said the Labour split reduces the odds of May getting her Brexit deal over the line, and could extend the timing of a possible Brexit. 

"The modest positive pound response likely reflects the reduced odds of a socialist Labour Party forming a government should early elections occur," Wong said. 

The local currency slipped to 60.56 euro cents from 60.82 cents yesterday and dropped to 75.74 yen from 76.67 yen. It declined to 4.6337 Chinese yuan from 4.6506 yuan yesterday. 

(BusinessDesk)

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