NZ dollar benefits as EU likely to grant Brexit extension

Thursday 24th October 2019

The New Zealand dollar rose on improved risk sentiment overnight as European Union officials look set to grant a Brexit extension.

The kiwi was trading at 64.20 US cents at 8am in Wellington from 63.89 cents at 5pm. The trade-weighted index was at 70.92 from 70.72.

“Kiwi outperformed most of its G-10 peers as markets flip back into a risk-on setting as EU officials look set to grant the UK a three-month extension to the Brexit deadline,” said ANZ Bank FX/rates strategist Sandeep Parekh.

The UK government won’t meet its current timetable of leaving the EU on Oct. 31 and an extension appears likely, something that has helped calm market nerves. However, Brexit uncertainty looks likely to continue to weigh on UK business investment and activity for now, said Parekh.

In a tweet, Donald Tusk, president of the European Council, said he gave reasons why he recommended the EU27 accept the UK request for an extension in a phone call with Prime Minister Boris Johnson. Earlier he tweeted he would recommend accepting the request to avoid a "no-deal Brexit."

Looking ahead, Parekh said markets will be focused on the European Central Bank’s policy meeting later in the global trading day “but the market doesn’t expect much action following last month’s easing package.”

This ECB policy meeting will be the last one under the presidency of Mario Draghi, before Christine Lagarde replaces him.

Markets will also be watching for a speech Thursday in the US from Vice President Mike Pence on China. A White House official told Reuters that the speech will “reflect on the US-China relationship over the past year and look at the future of our relationship.”

The New Zealand dollar was trading at 93.67 Australian cents from 93.41, at 49.71 British pence from 49.72, at 57.65 euro cents from 57.46, at 69.74 yen from 69.20, and at 4.5334 Chinese yuan from 4.5267.

(BusinessDesk)

Comments from our readers

No comments yet