NZ dollar hovers near 64 US cents in favourable risk environment

Tuesday 22nd October 2019

The New Zealand dollar continues to hover around 64 US cents as risk appetite remained firm.

The kiwi was trading at 63.97 US cents at 7:50 am in Wellington from 64.00 cents at 5pm. The trade-weighted index was at 70.65 points from 70.69.

“With little data on offer overnight, progress on US-China trade and Brexit negotiations kept markets in a risk-on setting, which saw the USD continue to weaken more broadly and risk assets, like the kiwi, buoyed,” said ANZ FX/rates strategist Sandeep Parekh.

President Donald Trump continued to speak optimistically about the possibility of a deal to end the US trade war with China, telling reporters at the White House the trade deal is coming along great, according to Reuters.

The kiwi is also benefiting from a weaker dollar as investors expect another 25 basis point rate cut from the US Federal Reserve at the end of the month.

Meanwhile, the pound continued to hold up, despite House of Commons Speaker John Bercow’s decision not to immediately allow a vote on the Brexit withdrawal deal.

This decision means that in order to get a deal, the government will have to try to pass the full Withdrawal Agreement Bill, Parekh said. This legislation will now be introduced to the House of Commons which will have its final vote on Thursday before the bill is then debated an voted upon by the House of Lords.

The kiwi was trading at 49.31 British pence from 49.55 late yesterday. Despite the ructions, markets remain hopeful a deal will be passed eventually, Parekh said.

The New Zealand dollar was trading at 57.38 euro cents from 57.34, at 69.44 yen from 69.43, and at 4.5243 Chinese yuan from 4.5232. It was at 93.14 Australian cents from 93.20 cents.

(BusinessDesk)

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