NZ dollar sheds gains to be little changed as US stocks drop, trade-war fears grow
By Jonathan Underhill
March 26 (BusinessDesk) - The New Zealand dollar was little changed, having shed its gains in New York on Friday as US stocks dropped and fears of a trade war grew.
The kiwi traded at 72.29 US cents as at 8:30am in Wellington from 72.33 US cents in late trading in New York on Friday, where it earlier reached as high as 72.73 cents. The trade-weighted index was at 74.29 versus 74.33 in New York.
China announced on Friday that it would impose tariffs on US$3 billion of US exports, its first firm move in retaliation for the US threat to impose tariffs of up to US$60 billion on Chinese goods. Stocks on Wall Street sold off late on Friday, adding to a risk-off tone. This morning, Finance Minister Grant Robertson and governor-elect of the Reserve Bank Adrian Orr sign a new policy targets agreement and merchandise trade for February is out later this morning.
"To date, the Chinese response has been very measured, but the market is clearly nervous that these tit-for-tat measures could morph into a broader trade conflict," said Nick Smythe, interest rate strategist at Bank of New Zealand, in a note. At this morning's PTA signing, "the market is likely to pay close attention to what Orr has to say."
The Robertson-Orr media briefing is also expected to include an update on the first stage of a review of the Reserve Bank Act, including an overview of the new decision-making structure at the bank. The new PTA is expected to change the central bank’s long-held exclusive focus on inflation targeting to include an employment objective.
The kiwi dollar traded at 51.14 British pence from 51.15 pence in New York on Friday and at 58.53 euro cents from 58.56 cents. It traded at 4.5622 yuan from 4.5654 yuan and at 75.66 yen from 75.76 yen. The local dollar rose to 93.77 Australian cents from 93.70 cents on Friday.