Friday 11th October 2019 |
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The New Zealand dollar strengthened during the day against the US dollar amid positive speculation about the US-China trade talks.
The kiwi was trading at 63.21 US cents at 5:10 pm in Wellington from 63.14 cents at 8am. The trade-weighted index was at 70.36 points from 70.37.
After the first day of high-level talks in Washington DC, US President Donald Trump talked about "very, very good negotiations with China." Contrary to reports earlier in the week, the Chinese delegation, led by Vice Premier Liu He, remained in the US for further talks on Friday.
"The rumours flowed like wine on a Friday night," says Mike Shirley, a dealer at Kiwibank. "It was all just speculation and in the end the good speculation out-weighed the bad."
Now the market is awaiting official confirmation of whatever has been agreed.
"We've been down this road so many times before," Shirley says, referring to the trade war between the world's two largest economies which has been dragging on since early last year.
While the kiwi has been very volatile all week, since closing in New York last Friday at 63.16 US cents, it has traded a reasonably narrow range between 62.80 and 63.30 cents.
"It just seems to be wobbling either side of 63. It's almost like a tether or a pivot point. We are waiting for something tangible or official" from the trade talks, Shirley says.
The pundits don't expect any comprehensive deal but are hoping the talks will deliver token concessions to de-escalate tensions, including perhaps increased purchases by China of US agricultural products.
The two countries may also agree to a currency pact – Trump frequently accuses China of currency manipulation.
Their optimism is in sharp contrast to tensions that developed ahead of the Chinese delegation's arrival, including the US blacklisting 28 Chinese companies and China cancelling screenings of US basketball games after a US executive tweeted support for the anti-China protestors in Hong Kong.
To date, the US has placed tariffs on more than US$630 billion of imports from China while China has imposed tariffs on US$120 billion of American goods, mostly farm products.
The New Zealand dollar was trading at 93.27 Australian cents from 93.38, 68.24 yen from 68.16, at 50.82 British pence from 50.77, at 57.37 euro cents from 57.38 and at 4.4892 Chinese yuan from 4.4954.
The two-year swap rate edged up to a bid price of 0.88721 percent from 0.8229 yesterday while the 10-year swaps rose to 1.2425 percent from 1.1125.
(BusinessDesk)
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