NZ dollar rises to week-high on news of talks between North, South Korea
By Jonathan Underhill
March 7 (BusinessDesk) - The New Zealand dollar jumped more than half a US cent as global risk appetite improved on news that North Korea is willing to hold talks with the US over its nuclear weapons programme.
The kiwi dollar rose to 72.94 US cents as at 8am in Wellington from 72.35 cents late yesterday. The trade-weighted index rose to 74.78 from 74.44 yesterday.
Global risk appetite and growth-linked currencies such as the kiwi advanced after South Korean officials said North Korean leader Kim Jong Un was open to talks with the US about ending his nuclear weapons programme and would suspend testing while such negotiations were underway. The officials relayed Kim's offer after a meeting in Pyongyang. The Korean news helped counter concerns in global markets that US President Donald Trump's proposed tariffs on steel and aluminium could spark a trade war.
"Risk appetite improved overnight, helped by positive headlines about 'talks' on denuclearisation on the Korea peninsula," said Sharon Zollner, chief economist at ANZ Bank New Zealand, in a note. "The potential for disappointment seems fairly high based on historical experience but in the meantime, risk appetite got a boost and the NZD jumped aboard."
The kiwi didn't move much after dairy product prices fell at the GlobalDairyTrade auction, with whole milk powder declining amid an increase in supply. The GDT price index retreated 0.6 percent from the previous auction two weeks ago. Whole milk powder decreased 0.8 percent to US$3,232 a tonne.
The Quotable Value house price index showed property values rose 6.5 percent year-on-year in February, from a 6.4 percent pace a month earlier.
The kiwi rose to 93.26 Australian cents from 92.96 cents yesterday, when the Reserve Bank of Australia kept rates on hold at 1.5 percent as expected by all 30 economists polled by Bloomberg and continued to signal it has no plans to adjust policy settings anytime soon. Also weighing on the Aussie, retail sales in January rose less than expected while the current account deficit printed wider than expected for the fourth quarter.
Traders will keep an eye on building work put in place in New Zealand in the fourth quarter, while across the Tasman, RBA governor Philip Lowe is scheduled to speak today and gross domestic product is released for the fourth quarter, with growth of 0.5 percent expected, down from 0.6 percent three months earlier.
The kiwi rose to 58.78 euro cents from 58.58 cents yesterday and gained to 52.50 British pence from 52.25 pence. It jumped to 77.38 yen from 76.95 yen and gained to 4.6020 yuan from 4.5872 yuan.