Friday 14th June 2019
|Text too small?|
The New Zealand dollar weakened and is headed for a weekly loss of more than 1 US cent amid ominous developments in the Gulf of Oman and as the escalation of Chinese anti-dumping duties on some steel products made traders more risk-averse.
Weak domestic manufacturing data didn’t help the outlook for the local economy either.
The kiwi was trading at 65.34 US cents at 5pm in Wellington from 65.65 at 8am and 66.64 last Friday in New York. The trade-weighted index fell to 71.89 points from 72.19 this morning and 73 in New York last Friday.
“It’s a combination of global nervousness and risk-off with the tanker incidents in the Gulf of Oman,” says Peter Cavanaugh, the senior client advisor at Bancorp Treasury Services.
“In the current environment, financial markets and currencies are vulnerable to bad news.”
Explosions on two oil tankers in the Gulf ratcheted up tensions between the US and Iran with one blast damaging the hull of a Japanese-owned tanker and setting on fire a Norwegian-owned vessel.
US Secretary of State Mike Pompeo has blamed Iran for the attacks while Iran says it “categorically” denies that accusation, saying that Iran has no connection to the explosions.
Meanwhile, China, the world’s largest steel producer and consumer, has raised anti-dumping duties on imports of alloy-steel seamless tubes and pipes from the US to between 101-147.8 percent and on imports from the European Union by 57.9-60.8 percent, according to the Xinhua news agency.
China had imposed duties of 13-14.1 percent on those products since 2014 on the grounds that they were being dumped on the Chinese market at below-market prices.
The move appears to be in retaliation to the US ratcheting up tariffs on about US$200 million of Chinese imports and threatening to impose tariffs on other products.
Locally, the BNZ-Business NZ Performance of Manufacturing Index fell 2.5 points to a seasonally adjusted 50.2 points in May, barely positive and at its slowest pace in more than six years – anything lower than 50 points means activity is contracting.
The main focus globally next week is likely to be the US Federal Reserve policy meeting and rate decision while New Zealand GDP data for the March quarter is due on Thursday.
The market is betting the Fed will cut rates several times this year while the Reserve Bank of Australia and the Reserve Bank of New Zealand have already cut rates in early June and early May respectively.
The New Zealand dollar was trading at 94.67 Australian cents from 94.97, at 51.53 British pence from 51.78, at 57.94 euro cents from 58.23, at 70.77 yen from 71.13, and at 4.5224 Chinese yuan from 4.5438.
The New Zealand two-year swap rate edged down to 1.3591 percent from 1.3780 yesterday while the 10-year swap rate eased to 1.8300 percent from 1.8580.
NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.
No comments yet
Supplements, skincare firm poised for reverse listing
NZX, EEX eye carbon auction opportunity
A2 Milk boss steps down, shares fall 7.7%
NZX says operating earnings will reach top of guidance
NZ dollar consolidates weekly gain of more than a US cent
NZ dollar holds gains on improved dairy, bank capital outlook
MARKET CLOSE: NZ shares gain; banks rally on Reserve Bank capital decision
NZ dollar rises; bank capital rules less harsh than expected
RBNZ relaxes capital requirements, allows preference shares, extends phase-in
NZ dollar extends gain amid mixed US data, possible trade progress