Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZD at 3-month high as China may scale back on US bonds

By Paul McBeth

Jan. 11 (BusinessDesk) - The New Zealand dollar rose to a new three-month high as reports China may cut its purchases of new US government bonds weighed on Wall Street and the greenback.

The kiwi rose as high as 72.28 US cents and traded at 71.90 cents as at 8am in Wellington from 71.64 cents yesterday. The trade-weighted index advanced to 74.82 from 74.66 yesterday.

Stocks on Wall Street and the greenback fell while US Treasuries were also sold off, pushing yields higher, on media reports citing unnamed sources that Chinese officials reviewing the Asian nation's foreign-exchange holdings recommended slowing or completely halting purchases of US Treasuries. China is the biggest foreign holder of US government debt with US$1.19 trillion of Treasuries as of October last year, and has been placed under increased pressure from US President Donald Trump over the nations' trading relationship.

"With trade tensions suggested as one of the reasons for China to hold less US debt overnight, currency moves in 2018 won’t solely be about where the best returns are on offer," ANZ Bank New Zealand rural economist Con Williams said in a note. The kiwi dollar "tested topside resistance overnight, but has the feeling that a better run of domestic data over the next week could see this broken."

The kiwi rose to 4.6775 Chinese yuan from 4.6713 yuan yesterday after the report. However, Bank of New Zealand interest rate strategist Nick Smyth warned against reading too much into the reports, given the size of the US bond market meant it was hard for a buyer of China's size to ignore and that until the yuan is freely floated, intervention to limit the Chinese currency's appreciation would stoke demand for the greenback.

"The market reaction does highlight the negative sentiment towards bonds at present," he said in a note.

New Zealand rates opened higher, with the two-year swap rate up 1 basis point to 2.2 percent and the 10-year swap rising 2 basis points to 3.2 percent.

Japan's yen was the strongest currency overnight in the wake of the Chinese reports, continuing a run since the Bank of Japan trimmed its purchases of Japanese government bonds, which some traders took to indicate a slight policy tightening by the central bank. The kiwi fell to 80.15 yen from 80.43 yen yesterday.

The local currency gained to 91.64 Australian cents from 91.49 cents yesterday and edged up to 60.12 euro cents form 59.97 cents. It increased to 53.20 British pence from 52.92 pence yesterday.

(BusinessDesk)


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Employment:Slow Track For Most Contentious Labour Law

The government will announce a timetable for legislating a range of long-signalled labour law changes but is placing its intention to introduce new Fair Pay Agreement legislation on a slower track to allow consultation with both employers and trade unions. More>>

ALSO:

NZ's Space Programme: Rocket Lab's Successful Launch

Science Media Centre: Rocket Lab successfully launched its Electron rocket and deployed satellites into orbit Sunday afternoon, a milestone for the company and New Zealand's fledgling private space industry. More>>

ALSO:

BusinessDesk: Body massages and Uber are in, DVDs are out, says Stats NZ

Statistics New Zealand has rejigged the consumers price index basket in its latest three-year review, adding body massages, Airbnb and Uber and removing DVD and Blu-Ray players…More>>

ALSO:

StuffMe: Commerce Commission Welcomes Dismissal Of Merger Appeal

In a summary of their judgment released today, Justice Dobson and lay member Professor Martin Richardson dismissed the appellants’ process criticisms and found the Commission was entitled to place significant weight on the prospect of reduced quality of the products produced by the merged entity. More>>

ALSO:

Digital Futures: New Chief Technology Officer Role Created

Communications Minister Clare Curran has called for expressions of interest for the new role of Chief Technology Officer position to help drive a forward-looking digital agenda for New Zealand. More>>

Real Estate: NZ house sales slump in December but prices still firm

The number of property sales across New Zealand slumped 10 percent in December from a year earlier but prices continued to lift, according to the Real Estate Institute. More >>

ALSO: