Wednesday 10th April 2019 |
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The New Zealand dollar remains under pressure after risk appetite took a hit when the International Monetary Fund cut its global growth forecasts for 2019 and 2020.
The kiwi was trading at 67.43 US cents at 8am from 67.45 US cents at 5pm in Wellington. The trade-weighted index was at 73.09 points from 73.14.
"After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies," the IMF said in its latest World Economic Outlook. US-China trade tensions, a slowdown in the euro area and natural disasters in Japan all contributed, it said.
As a result, global growth is now projected to slow from 3.6 percent in 2018 to 3.3 percent in 2019, before returning to 3.6 percent in 2020. Growth for 2018 was revised down by 0.1 percentage point relative to the October 2018 World Economic Outlook and the forecasts for 2019 and 2020 are now marked down by 0.4 percentage point and 0.1 percentage point, respectively, it said.
Also, "while global growth could surprise favorably if trade differences are resolved quickly so that business confidence rebounds and investor sentiment strengthens further, the balance of risks to the outlook remains on the downside," it said.
"Kiwi gave back its hard-earned gains as the IMF cut its global growth forecast for 2019. This pair will continue to be led by offshore events with markets looking ahead to the US data flow, with US inflation data due shortly before the FOMC minutes," said ANZ FX/rates strategist Sandeep Parekh. Both the CPI and minutes will be reported tomorrow New Zealand time.
Brexit will also remain in focus, with the clock counting down to Friday's deadline. According to the BBC, European Council president Donald Tusk has suggested offering the UK a "flexible" extension to Brexit of up to a year, with the option of leaving earlier if a deal is ratified. EU states will vote on the extension proposals at a summit on Wednesday.
The kiwi was trading at 94.58 Australian cents from 94.40. It was at 51.65 British pence from 51.59, at 59.85 euro cents from 59.88, at 74.91 Japanese yen from 75.12 yen and at 4.5240 Chinese yuan from 4.5277.
(BusinessDesk)
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