NZ dollar little changed as market digests Trump's trade plans, US trade gap reaches 9-year high
By Jonathan Underhill
March 8 (BusinessDesk) - The New Zealand dollar was little changed as US President Donald Trump tweeted that he's asked China to reduce its trade imbalance with America and figures showed the US trade deficit at its highest since October 2008.
The kiwi traded at 72.78 US cents as at 8:30am in Wellington from 72.88 cents late yesterday. The trade-weighted index was at 74.70 from 74.77.
In a week where Trump's trade ambitions remained in focus, his economic adviser Gary Cohn quit, having opposed the president's plan to impose tariffs on steel and aluminium imports to protect US industry. Overnight Trump tweeted that he'd asked China to cut its trade imbalance with the US by US$1 billion while figures showed the US January trade deficit was a wider-than-expected US$56.6 billion and the gap with China jumped 17 percent to US$36 billion.
"It was another night where there were numerous headlines and comments related to the US’s latest stance on trade," said Philip Borkin, senior economist at ANZ Bank New Zealand, in a note. "At times it has been hard to get an accurate steer on what that stance actually is." Trump's request to China to reduce the trade imbalance "is barely a rounding error considering the US-China imbalance was US$36 billion in January alone. Perhaps it hints that Washington’s appetite for a trade war is actually not that high."
The kiwi slipped to 93.16 Australian cents having reached 93.36 cents yesterday after figures showed Australia's economy grew by less than expected in the final quarter of 2017. It was little changed at 58.66 euro cents after figures showed Europe's economic growth came in at the expected 0.6 percent in the fourth quarter.
Traders will be watching for fourth-quarter manufacturing data in New Zealand today and January trade figures in Australia while tonight, the key focus will be the European Central Bank's policy review, where no major changes are expected.
The kiwi rose to 77.15 yen from 77 yen yesterday and was little changed at 4.6015 yuan from 4.6091 yuan. It traded at 52.39 British pence from 52.44 pence yesterday.