NZ dollar drops as Trump says he wants a 'strong' greenback

Friday 26th January 2018

The New Zealand dollar fell almost half a US cent after US President Donald Trump said he wanted to see a "strong" greenback and that comments by his Treasury secretary earlier this week were misinterpreted.

The kiwi dropped to 73.32 US cents as at 8.25am in Wellington from 73.72 cents immediately before Trump's comments, and down from 73.82 cents yesterday. The trade-weighted index declined to 74.71 from 75.02 yesterday.

The Dollar Index, a measure of the greenback against a basket of currencies, gained after Trump told CNBC the world's reserve currency will appreciate under his leadership, saying "the dollar is going to get stronger and stronger, and ultimately I want to see a strong dollar". The greenback dropped sharply yesterday when Treasury Secretary Steven Mnuchin said a weaker greenback was good for trade, comments Trump said were taken out of context. The US president is scheduled to deliver a speech at the World Economic Forum in Davos, Switzerland.

"The initial move we've seen this morning is due to those dollar comments by Trump and gives us that little nudge back down," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington. "The kiwi looks pretty well-capped at 74.40 (US cents) on the upside."

No local data is scheduled today and Australian markets are closed for the Australia Day holiday, which Ive said leaves investors watching for more comments at the World Economic Forum and awaiting US economic data overnight.

The kiwi fell to 59.11 euro cents from 59.36 cents yesterday after European Central Bank president Mario Draghi was optimistic about the region's economic recovery, which he said underpinned the stronger euro and gave the monetary authority confidence inflation will move closer to 2 percent.

The New Zealand dollar was little changed at 91.21 Australian cents from 91.18 cents yesterday and fell to 4.6330 Chinese yuan from 4.6702 yuan. It gained to 51.81 British pence from 51.65 pence yesterday and fell to 80.19 yen from 80.48 yen.

(BusinessDesk)

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