NZ dollar holds gains against greenback as markets fret about global trade

Thursday 24th May 2018

The New Zealand dollar held its gains against the greenback in Asian trading as US dollar sentiment was dented by ongoing jitters over global trade.

The kiwi dollar traded at 69.25 US cents as at 5pm in Wellington from 69.20 cents at 8am and up from 69.09 cents late yesterday. The trade-weighted index rose to 72.68 from 72.48.

According to Reuters, the US administration has launched a national security investigation into car and truck imports that could lead to new tariffs. Japan, China and South Korea said they would monitor the situation, while Beijing added it would defend its interests.

“China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal international trade order,” Gao Feng, spokesman at the Ministry of Commerce, said at a regular news briefing in Beijing on Thursday which focused largely on whether it is making any progress in its trade dispute with Washington, Reuters reported.

"The comments from the Ministry of Commerce delivered a bit of a serve to the US," said Mark Johnson, a senior dealer at OMF. Meanwhile, US President Donald Trump signalled a new direction in US-China trade talks and said any deal would need "a different structure".

Johnson said the kiwi already benefitted from minutes to the US Federal Reserve's last policy review being interpreted as dovish, but he said the currency is trading in a very tight range. With very little domestic data on the near horizon, the kiwi will continue to be driven by events offshore, he said.

The kiwi gained to 59.14 euro cents from 58.72 cents, traded at 91.47 Australian cents from 91.51 cents yesterday and rose to 4.4255 yuan from 4.4037 yuan. It decreased to 75.81 yen from 76.33 yen and rose to 51.79 British pence from 51.49 pence.

New Zealand's two-year swap rate fell 1 basis point to 2.18 percent while 10-year swaps fell 2 basis points to 3.14 percent.

(BusinessDesk)

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