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NZ dollar range-bound as traders overlook Ardern's bid to woo business

Tuesday 28th August 2018

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The New Zealand dollar traded in a tight range as investors largely overlooked a speech by Prime Minister Jacinda Ardern aimed at stoking flagging business confidence ahead of the latest survey on Thursday. 

The kiwi traded at 66.81 US cents at 5pm in Wellington from 67 cents at 8am and 66.87 cents late yesterday. The trade-weighted index was at 72.08 versus 72.20. 

Global risk appetite got a lift when the US and Mexico reached a trade agreement that will replace a soon-to-be-terminated North American Free Trade Agreement bill, boosting the kiwi dollar overnight. However, the local currency gave up those gains during the Asian trading day, with investors unfazed by Ardern's attempts to lift business confidence.

Among other things, Ardern attempted to win over business leaders with a new working group headed by Air New Zealand chief executive Christopher Luxon and sought to ease fears over sector-level collective agreements, saying no more than two will completed this term. She also reiterated the need for tight fiscal management. 

"I don't think it mattered," said Mark Johnson, a private client manager at OMF. Investors will wait for the ANZ Business Outlook later in the week "as the proof is in the pudding," he said.

Johnson also said the kiwi didn't benefit too much from the US-Mexico news given the main focus for New Zealand is the US-China trade war. Any news on that front would be more likely to spark a reaction, he said. 

The kiwi traded at 91.19 Australian cents from 91.32 Australian cents late yesterday. It was at 4.5548 Chinese yuan from 4.5558 yuan and traded at 74.29 yen from 74.31 yen. The kiwi fell to 57.26 euro cents from 57.55 cents and traded at 51.92 British pence from 52.03 pence.

New Zealand's two-year swap rate was unchanged at 2.02 percent and 10-year swaps rose 3 basis points to 2.88 percent.


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