NZ dollar gains as reports of Flynn testimony weigh on greenback

Monday 4th December 2017

The New Zealand dollar gained in the US on Friday after reports that former Trump adviser Michael Flynn is prepared to testify against the US president about being asked to make contact with Russia in the run-up to last year's presidential elections.

The kiwi dollar traded at 68.66 US cents as at 8am in Wellington from 68.85 cents in late New York trading and up from 68.30 cents in Asia at the end of last week. The trade-weighted index was at 72.50 from 72.58 in New York and 72.12 in Wellington on Friday.

Former US national security adviser Michael Flynn pleaded guilty to lying to the FBI about his contact with the then Russian ambassador to the US Sergey Kislyak and ABC News reported that he was willing to testify that President Donald Trump directed him to make contact. Trump has already issued a denial via Twitter while criticising the FBI.

The greenback had gained earlier on Friday on optimism Senate Republicans have enough votes to push through tax cuts and Senate Republican leader Mitch McConnell said on Sunday he was "very optimistic" the tax legislation would be signed into law.

"Markets have generally shrugged off US political risks up until now, but that is perhaps getting a little harder to do," said Sharon Zollner, chief economist at ANZ Bank New Zealand, in a note. "The moves on Friday encapsulated a market that is torn between optimism on tax, and uncertainty about an escalating Mueller investigation may mean," she said, referring to special counsel Robert Mueller's investigation.

"The NZ economy has its challenges to navigate, but a renewed bout of USD weakness is something that can’t be ruled out," she said. The kiwi would find support if it fell as low as 67.80 US cents and resistance at 69.20 cents, she said.

With no local data releases scheduled, traders will be looking across the Tasman for reports on third-quarter inventories and profits, and new home sales for October. The kiwi was at 90.15 Australian cents from 90.03 cents on Friday in New York.

It fell to 51.01 British pence from 51.14 pence and declined to 57.85 euro cents from 57.99 cents. It rose to 77.45 yen from 77.24 yen and fell to 4.5396 yuan from 4.5568 yuan.

(BusinessDesk)

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