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NZ dollar weaker as greenback comes back into favour

Tuesday 11th June 2019

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The New Zealand dollar weakened, driven by demand for the greenback as markets grow more positive about a possible US-China trade deal.

The kiwi was trading at 66.12 cents at 7:50am in Wellington from 66.30 US cents at 5pm. The trade-weighted index was at  72.60 from 72.81.

President Donald Trump told CNBC that additional tariffs on Chinese goods will be levied if President Xi Jinping does not attend this month’s G-20 meeting, which is scheduled for June 28-29 in Osaka, Japan. However, he also said he’d be surprised if Xi did not attend. Trump said he has “a great relationship” with Xi, adding that “he’s actually an incredible guy.”

The greenback got a lift as "markets traded with a more positive tone, supported by comments that Trump still expected to meet with China’s Xi at the G20 Summit and that a China deal is going to work out," said ANZ Bank FX/Rates strategist Sandeep Parekh. 

The kiwi also lost ground after yesterday's trade data showed Chinese imports had slumped in May. The data showed exports had lifted 1.1 percent on the year while imports had dropped 8.5 percent. China is New Zealand's leading trading partner, and exports to China now account for about a quarter of New Zealand's international sales. 

Mitul Kotecha, senior emerging markets strategist for TD Securities, said the weakness in imports "will once again renew concerns about China's economy, especially given the complicated path in delivering a US-China trade deal." 

The kiwi was trading at 52.09 British pence from 52.16 and Parekh said to "expect some volatility to come with headlines" as the race to replace Prime Minister Theresa May heats up. Ten Conservative MPs are in the running, according to The Telegraph. 

The New Zealand dollar was trading at 94.96 Australian cents from 95.09, at 58.41 euro cents from 58.63, at 71.68 yen from 72.02 yen and at 4.5820 Chinese yuan from 4.5968.

(BusinessDesk)

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