NZ dollar little changed

Friday 24 March 2017 08:52 AM

NZ dollar little changed as US healthcare vote seen testing Trump's policy resolve

By Jonathan Underhill

March 24 (BusinessDesk) - The New Zealand dollar was little changed as financial markets awaited the outcome of a US vote to repeal the Affordable Care Act, known as Obamacare, as a test of whether the Trump administration can enact a policy platform that could stoke the US economy and inflation.

The kiwi traded at 70.29 US cents as at 8am in Wellington, from 70.39 cents late yesterday. The trade-weighted index was at 76.28 from 76.33.

Traders view the healthcare reform as a key test of President Donald Trump because it could provide more certainty for other policy initiatives, including a massive spend on infrastructure and tax cuts. Reuters reported that Trump has struggled to win over sceptical Republicans and there is uncertainty about when a vote would occur in the House. In New Zealand, merchandise trade figures for February are likely to be the main focus.

"The Trump reflation trade, based on optimism that Trump’s spend-up and tax plans will boost the US economy and inflation further, is facing a test today," said Sharon Zollner, senior economist at ANZ Bank New Zealand, in a note. "The upcoming vote on the US healthcare bill may well have implications for the USD – amongst other things – and hence the NZD."

New Zealand's trade balance is expected to have turned to a surplus of $180 million last month, from a deficit of $285 million, based on economist forecasts. Little market reaction is expected, however, with the kiwi broadly unchanged through yesterday's Reserve Bank announcement, which kept the official cash rate unchanged at 1.75 percent and signalling rates are on hold for the time being.

The kiwi dollar fell to 56.14 British pence from 56.40 pence, having gained yesterday on reports of the attack near the British parliament.

The New Zealand dollar rose to 92.15 Australian cents from 91.91 cents, fell to 77.88 yen from 78.37 yen and declined to 4.8376 yuan from 4.8482 yuan. It fell to 65.12 euro cents from 65.25 cents.

(BusinessDesk)

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