NZ dollar gets lift from US-China trade progress

Friday 8th November 2019

The New Zealand dollar benefited from improving risk appetite as an interim US-China trade deal appeared more likely.

The kiwi was trading at 63.63 US cents at 7:50 am in Wellington versus 63.47 cents at 5pm. The trade-weighted index was at 70.05 from 70.02.

The global mood improved after China announced that the soon-to-be signed phase one agreement will specify which tariffs will be rolled back as assorted milestones are reached, said Kiwibank senior FX trader Mike Shirley. The news was confirmed by a US official, which added to the improving sentiment.

China and the US have agreed to roll back tariffs on each other’s goods in phases as they work toward a deal between the two sides, Bloomberg reported.

“In the past two weeks, top negotiators had serious, constructive discussions and agreed to remove the additional tariffs in phases as progress is made on the agreement,” Ministry of Commerce spokesman Gao Feng said.

A US official, who spoke on condition of anonymity, confirmed that an agreement to roll back tariffs would be part of the phase-one deal, Bloomberg said. The negotiations are ongoing and a time or place for any signing of a pact is yet to be determined.

There was “cautious optimism,” according to Shirley.

Some of the kiwi's gains were capped after data showed the number of Americans applying for first-time unemployment benefits fell last week, remaining at historically low levels, according to a US Labor Department report.

“The strong employment data supports signals from the Federal Reserve of a pause in the easing cycle,” said ANZ FX/rates strategist Sandeep Parekh.

Looking ahead, investors will be watching for the Reserve Bank of Australia’s statement on monetary policy for any clues about future rate cuts. Earlier this week, the RBA left its cash rate unchanged while saying it is prepared to ease monetary policy further if needed.

The kiwi was trading at 92.08 Australian cents from 92.43, at 49.63 British pence from 49.42, at 57.59 euro cents from 57.31, at 69.63 yen from 69.96 and at 4.4399 Chinese yuan from 4.4533.

(BusinessDesk)

Comments from our readers

No comments yet