NZ dollar gains as US healthcare reform stumbles, weighing on greenback
By Jonathan Underhill
July 19 (BusinessDesk) - The New Zealand dollar rose against a broadly weaker greenback in the face of the collapse of a bill to reform US healthcare that eroded confidence in US President Donald Trump's ability to enact policy.
The kiwi rose to 73.53 US cents as at 8:30am from 73.38 cents late yesterday. The trade-weighted index rose to 77.83 from 77.76 yesterday.
The Republican-dominated Senate failed to agree on plans to overhaul Obamacare, with three of its own senators refusing to support the move. That added to negative sentiment for the US dollar, which has also suffered on concern the Federal Reserve will lag behind other major central banks in raising interest rates. The weak greenback saw the kiwi revive after falling yesterday after figures showed domestic inflation evaporated in the second quarter.
"The news that Donald Trump and his party had once again failed to gain enough support to repeal and replace Obamacare has cast doubts over Trump’s ability to pass any new bills including his proposed tax reforms," traders at HiFX said in a note. "Yesterday’s disappointing inflation data which saw the NZD fall sharply was all but forgotten by the early afternoon with the NZD joining all other G10 currencies in rising sharply against the USD."
The kiwi rose to 56.34 British pence from 56.03 pence late yesterday after figures showed UK inflation slowed last month, raising doubts about rate hike by the Bank of England. It was little changed at 92.84 Australian cents from 92.85 cents, having fallen yesterday when minutes of the last Reserve Bank of Australia meeting showed it has turned more upbeat on the economic outlook, citing an improving labour market, stronger public investment and a pick up in household consumption.
The New Zealand dollar didn't move much after dairy product prices rose at the Global Dairy Trade auction, gaining for the first time in three auctions. The GDT price index rose 0.2 percent from the previous auction two weeks ago to US$3,387. Some 26,688 tonnes of product was sold, down from 28,574 tonnes at the previous auction.
The kiwi traded at 63.58 euro cents from 63.64 cents and rose to 82.32 yen from 82.21 yen. It fell to 4.9590 yuan from 4.9618 yuan.