NZ dollar eases as greenback gains some ground in holiday-thin markets

Tuesday 28th May 2019

The New Zealand dollar eased as the US dollar gained some ground in thin markets with both the US and the UK on holiday overnight.

The kiwi was trading at 65.41 US cents at 7:55am in Wellington from 65.51 at 5pm and the trade-weighted index eased to 72.07 points from 72.13.

It was a "quiet session for markets overnight, with no major data releases, UK markets closed for Spring Bank Holiday, and the US observing Memorial Day," said ANZ FX/rates strategist Sandeep Parekh.

US-China trade tensions continue to percolate and the greenback lifted slightly when US President Donald Trump said the US isn’t ready to make a deal and that tariffs on Chinese goods “could go up very, very substantially, very easily," according to Bloomberg.

"Kiwi's ascent was capped as the USD strengthened more broadly overnight. This came on the back of Trump's comments suggesting he was in no urgency to secure a trade deal with China," said Parekh. The New Zealand dollar has support at 65 US cents and resistance at 65.80, he said.

On the day, markets will be watching for Australian consumer confidence data and Japan’s services producer price indicies. The main events for the kiwi this week, however, will be the Reserve Bank's twice-yearly financial stability report due Wednesday and the government's budget Thursday.

Westpac Bank expects the Treasury's economic outlook to be downgraded in the budget forecasts, with the GDP forecast starting at a lower point. "The resultant undershoot in expected tax revenue means that operating surpluses should be lower than previously forecast. In turn, net debt over the next four years could be $4 billion larger than previously forecast," it said.

The New Zealand dollar was trading at 94.56 Australian cents from 94.52, unchanged at 51.47 British pence, at 58.39 euro cents from 58.47, at 71.62 yen from 71.73 and at 4.5101 Chinese yuan from 4.5172.

(BusinessDesk)

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