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NZ dollar falls as US, China trade talks drag on

Friday 24th August 2018

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The New Zealand dollar fell as US and Chinese officials tried to find common ground in a protracted trade dispute that threatens to slow the global economy. 

The kiwi dropped to 66.34 US cents as at 8am in Wellington from 66.68 cents yesterday. The trade-weighted index declined to 72.06 from 72.26. 

China and the US implemented US$16 billion of tariffs on each other's goods, bringing two-way tariffs to US$100 billion in what's been a tit-for-tat dispute since US President Donald Trump took over the White House early last year. Low-level officials are in their second day of negotiations in an effort to avoid a further US$200 billion of tariffs being imposed. At the same time, the Federal Reserve is raising interest rates as the US economy expands at a fast pace, stoking demand for the greenback. 

"Low-level US-China talks continued for a second day in Washington but expectations are low for much progress and we might see some sort of joint statement by the end of the week," Bank of New Zealand senior markets strategist Jason Wong said in a note. "Against a backdrop of a stronger USD, the NZD slipped around 30 pips to 0.6670 in local trading and has slipped just over 30 pips in overnight trading." 

The kiwi traded at 91.53 Australian cents from 91.43 cents yesterday as investors soured on the Aussie as Prime Minister Malcolm Turnbull's grip on the leadership remains shaky. 

"It seems the market doesn’t like the political uncertainty overhanging Australia, with PM Turnbull likely to face another leadership challenge this afternoon," Wong said. 

Local data today include July merchandise trade figures. The central bankers' forum in Jackson Hole, Wyoming over the weekend is also in view. 

The kiwi traded at 73.83 yen from 73.89 yen yesterday and fell to 57.49 euro cents from 57.70 cents. It was little changed at 51.77 British pence from 51.80 pence yesterday and fell to 4.5621 Chinese yuan from 4.5816 yuan. 

(BusinessDesk)

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