NZ dollar falls as China retaliates over US tariffs, yen rises on safe-haven appeal
By Jonathan Underhill
April 3 (BusinessDesk) - The New Zealand dollar fell after China retaliated over US tariffs, sapping risk appetite and driving up demand for so-called safe-haven currencies such as the yen.
The kiwi dollar traded at 72.17 US cents as at 8am in Wellington from 72.34 cents late yesterday. The trade-weighted index was at 74.16 from 74.19.
China said it would impose tariffs of up to 25 percent on a list of 128 products imported from the US in response to US President Donald Trump's tariffs on imports of steel and aluminium. US stocks tumbled amid concerns about a trade war and after Trump tweeted that Amazon had an unfair market advantage versus US bricks and mortar retailers.
"Get ready for a bumpy ride to kick off the shortened week after US equities tumbled overnight," said Miles Workman, an economist at ANZ Bank New Zealand, in a note. "Expect NZD to be caught in the global crosshairs of risk-off trading."
The New Zealand dollar fell to 76.43 yen from 76.89 yen late yesterday as the yen reached its strongest level in about a week against the greenback, which was only modestly weaker following data including the ISM manufacturing index for March, down 1.5 points to 59.3, which Workman said "is still a very healthy reading."
Today traders in New Zealand will be watching for the NZIER's quarterly survey of business opinion while across the Tasman, the Reserve Bank of Australia is expected to leave its cash rate unchanged at 1.5 percent.
The kiwi traded at 94.20 Australian cents from 94.16 cents late yesterday.
Tonight, the latest Global Dairy Trade auction will be closely watched as an early indicator of dairy farm incomes.
The New Zealand dollar traded at 58.66 euro cents from 58.70 cents late yesterday and fell to 4.5312 yuan from 4.5376 yuan. It declined to 51.38 British pence from 51.59 pence yesterday.