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NZ dollar falls as thaw in US-China trade stoush bolsters greenback

Friday 6th April 2018

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The New Zealand dollar fell as a perceived thaw in the US-China trade relations stand-off stoked demand for the greenback and renewed investors' appetite for risk-sensitive assets, pushing stocks on Wall Street higher. 

The kiwi declined to 72.68 US cents at 8am in Wellington from 73.04 cents yesterday. The trade-weighted index slipped to 74.84 from 74.97. 

The Dollar Index, a measure of the greenback against a basket of currencies, gained 0.4 percent after White House trade adviser Peter Navarro said US officials will talk with China before imposing tariffs on goods from the world's second-biggest economy. Trade tensions between the two nations have spooked investors and the softer stance eased some concerns, helping push up stocks on Wall Street, with the Dow Jones Industrial Average gaining 1 percent. Gains were tempered by a wider US trade deficit in February.

"The market sees receding risks of an escalating US-China trade war, helping US equities extend their recovery yesterday," Bank of New Zealand senior markets strategist Jason Wong said in a note. "A receding of trade tensions sees improving risk appetite but in this case with the US at the centre of concern, higher risk appetite in this context means a stronger USD." 

With no local data of note, US employment data will be the next major focus for investors. Analysts expect the world's biggest economy added 185,000 jobs last month. 

The local currency decreased to 94.58 Australian cents from 94.77 cents yesterday, with the easing trade tensions seen as more beneficial to Australia, given its larger exposure to China. The kiwi slipped to 4.5808 Chinese yuan from 4.5832 yuan yesterday. 

The New Zealand dollar traded at 59.37 euro cents from 59.38 cents yesterday and edged up to 51.89 British pence from 51.81 pence. It increased to 78.04 yen from 77.96 yen yesterday. 


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