NZ dollar higher on thaw in US-China trade dispute

Monday 1st July 2019

The New Zealand dollar firmed as signs of a thaw in US-China trade relations cheered investors.

The kiwi was trading at 67.19 US cents at 8am versus 67.17 cents late Friday in New York. The trade-weighted index was at 73.22 from 73.21 in New York.

Markets were poised for good news and sentiment got a lift when China's President Xi Jinping and President Donald Trump, on the sidelines of the G20 summit in Osaka, agreed to a ceasefire and a return to talks.

“Kiwi soared into the G20 leaders’ summit as early trade headlines gave markets a reason to be optimistic. While Trump and Xi have agreed a 'truce', there is still plenty for the two countries to discuss," said ANZ Bank FX/rates strategist Sandeep Parekh.

He noted that Trump sounded willing to trade away the ban on equipment sales to Huawei, at least in non-sensitive areas.

“The softer line appears to be in response to US corporate pressure; the headlines will likely be enough to please markets on the open,” he said.

However, “large stumbling blocks remain”.

The China Daily Saturday noted “things are still very much up in the air” and “that is how they will no doubt remain until a deal is formally signed, sealed and delivered,” which may temper some enthusiasm.

With little domestic data on the radar, the immediate focus will now shift to the Reserve Bank of Australia rate decision on Tuesday, where another 25 basis-point rate cut to 1.00 percent is widely expected.

The kiwi was trading at 95.54 Australian cents from 95.58. It was at 52.89 British pence from 52.95, at 59.12 euro cents from 59.11, at 72.65 yen from 72.52, and at 4.6119 Chinese yuan from 4.6140

(BusinessDesk)

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