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NZ dollar slips in subdued trading after Trump's tweets on Korea

Wednesday 3rd January 2018

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The New Zealand dollar eased slightly in Asian trading in holiday-thin markets after US President Donald Trump tweeted threats to North Korea.

The kiwi traded at 70.83 US cents as at 5pm in Wellington versus 71.03 cents late yesterday. The kiwi has gained in recent sessions as the prices of raw materials have lifted commodity-linked currencies. The trade-weighted index was at 73.72 from  73.88 yesterday.

Mike Shirley, senior FX dealer for Kiwibank said the New Zealand dollar may have "waned slightly on risk aversion/flight to safety following Trump’s twitter comments regarding North Korea." He noted there was a similar theme in the Japanese yen, which strengthened against the US dollar as a safe-haven play. The "magnitude of the moves, however, was far less than we’ve seen in the past – in part because the market has simply become accustomed to these exchanges," he said.

Among other things, Trump tweeted "North Korean Leader Kim Jong Un just stated that the “Nuclear Button is on his desk at all times.” Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!" 

Shirley noted, however, that all moves are very marginal as many people are still on holiday.  He said the US dollar may also have benefited as the new trading year gets underway and investors retake positions they may have unwound at the end of last year. 

Looking ahead, he said the main event this week will be the US nonfarm payrolls overnight Friday. Tomorrow nights' ADP survey may also garner some attention ahead of that release. 

The kiwi dollar fell to 52.09  British pence from 52.60 pence yesterday. It traded at 90.63 Australian cents from 91 cents yesterday and declined to 58.78 euro cents from 59.14 cents. It fell to 79.57 yen from 80.02 yen and dropped to 4.6071 yuan from 4.6221 yuan.

New Zealand’s two-year swap rate was unchanged at 2.19 percent while the 10-year swap rate rose 3 basis points to 3.16 percent. 

(BusinessDesk)

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