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NZ dollar up 0.5% on week but rangebound ahead of G7

Friday 8th June 2018

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The New Zealand dollar is headed for a 0.5 percent weekly gain against the greenback but remains rangebound ahead of the Group of Seven meeting in Canada this weekend. 

The kiwi dollar traded at 70.25 US cents at 5pm in Wellington from 70.29 US cents at 8:30am and from 70.45 cents yesterday. It traded at 69.90 late last Friday in Wellington. The trade-weighted index was at 73.52  from 73.58 from late yesterday.

Trading has been relatively quiet as markets are waiting to see if different leaders clash with US President Donald Trump at the G7 meeting in Canada after the US imposed steel and aluminum tariffs. Trump has said he is protecting US industry but impacted nations like Canada and the European Union have said they are illegal. 

"The G7 looks like it might actually have some action for a change," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.  He noted, however, Trump will be leaving the meeting early to travel to Singapore for a meeting with North Korean leader Kim Jong Un, scheduled for June 12.

The kiwi is also stronger against the Aussie, despite a strong GDP print across the Tasman but Kelleher said it may be that some people are selling the Aussie on concerns about China and emerging markets. Rather than hedging the yuan "they may be using the Aussie instead," he said. The Aussie will also be more impacted by any global trade ructions than the kiwi, which may also be spurring some selling.  The kiwi traded at 92.26 Australian cents from 91.98 cents late yesterday. 

The kiwi also remained weak against the euro after speculation the European Central Bank will consider the end of its stimulus measures at a meeting next week and traded at 59.49 euro cents from 59.72 cents late yesterday. 

The New Zealand dollar traded at  52.31 British pence from 52.44 pence. It fell to 77.01 yen from 77.42 yen and was at 4.4967 yuan versus 4.5019 yuan.

New Zealand's two-year swap rate fell 1 basis point to 2.22 percent and 10-year swaps fell 2 basis points to 3.20 percent.

(BusinessDesk)

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