NZ dollar hovers near 69 US cents amid global trade jitters; domestic GDP looms

Wednesday 20th June 2018

The New Zealand dollar is hovering around 69 US cents as trade war jitters continue to ramp up but attention could shift to the domestic arena tomorrow if the first quarter gross domestic product data surprises.

The kiwi traded at 69.01 US cents as at 5pm in Wellington versus 68.96 US cents as at 8am in Wellington and 68.83 cents late yesterday. The trade-weighted index fell to 73.33 from 73.49.

Global tensions have been high since U.S. President Donald Trump threatened Monday to hit $200 billion of Chinese imports with 10 percent tariffs if Beijing retaliated against his previous targeting of $50 billion in imports. Reuters quoted an official Chinese state-run newspaper as saying the Trump administration has “bloodlust” when it comes to pushing its trade agenda against China and wants to “suck the lifeblood” from the Chinese economy.

"The last few days it's been the same theme driving markets. It's the US-China trade spat," said Imre Speizer, senior markets strategist at Westpac Banking Corp in Auckland.

Tomorrow's first-quarter GDP data, however, is likely to garner more interest, he said. Economists are expecting the economy expanded 0.5 percent on quarter and 2.7 percent on the year, according to the median in a Bloomberg poll of 14.

BNZ head of research Stephen Toplis said, however, today's first quarter current account data underscored a rough patch in net exports in the March quarter and "if nothing else, this solidifies our view of risk around tomorrow’s Q1 GDP growth expectation (still 0.5%) – that is, to the downside."

The current account deficit widened to a seasonally adjusted $3.1 billion in the March quarter versus a seasonally adjusted $2 billion deficit in the December quarter. According to Stats NZ, the seasonally adjusted deficit due to a drop in exports and record high imports.

The kiwi fell to 93.31 Australian cents from 93.73 cents yesterday. It fell to 4.4693 yuan from 4.4706 yuan and traded at 76.02 yen from 76.05 yen and at 59.64 euro cents from 59.60 cents. It traded at 52.44 British pence from 52.28 pence.

New Zealand's two-year swap rate lifted 2 basis point to 2.24 percent, and 10-year swaps rose 1 basis point to 3.10 percent.

(BusinessDesk)

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