NZ dollar sticks to tight range as markets await G7

Thursday 7th June 2018

The New Zealand dollar stuck to a tight range against the greenback in Asian trading as markets await the upcoming Group of Seven summit followed by a raft of central bank meetings next week.

The kiwi traded at 70.45 US cents as at 5pm in Wellington from 70.30 US cents as at 8 am and 70.39 cents yesterday and the trade-weighted index was little changed at 73.58.

The upcoming G7 meeting on Friday and Saturday in Charlevoix, Quebec is expected to focus on U.S. tariffs on steel and aluminum imports from Canada, Mexico and the European Union that were imposed last week.

Stuart Ive, senior dealer foreign exchange at OMF in Wellington, said the kiwi was largely "sidelined as we await G7 and key central bank announcements next week from the Federal Reserve, the European Central Bank and the Bank of Japan." He noted it stuck to a 14 point range against the US dollar in Asian trading.

"Markets waiting to see how G7 and the much commented on trade talks develop. The French have been quoted as saying G7 not the place ask US to remove tariffs but body language is going to say a lot. (US President Donald) Trump remains unmoved on US trade stance," he said. If the talks break down the US dollar could be sold, even though the Federal Reserve is expected to lift rates at next week's review , Ive said

The kiwi traded at 59.72 euro cents from 60.08 cents late yesterday, still weaker after officials in Europe said the European Central Bank could wind down its stimulus measures by the end of the year in a first step toward returning to a more normal monetary policy as inflation picks up.

The New Zealand dollar traded at 91.98 Australian cents from 91.90 cents yesterday and 52.44 British pence from 52.52 pence. It traded at 77.42 yen from 77.39 yen and at 4.5019 yuan from 4.5014 yuan.

New Zealand's two-year swap rate rose 1 basis point to 2.23 percent and 10-year swaps rose 6 points to 3.22 percent.

(BusinessDesk)

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