NZ dollar gains to 7-week high as Xi, Trump soothe trade dispute fears, risk appetite rises
By Jonathan Underhill
April 11 (BusinessDesk) - The New Zealand dollar rose to the highest level in seven weeks as US President Donald Trump tweeted his thanks to Chinese President Xi Jinping for saying he was committed to an open economy and lower tariffs.
The kiwi dollar rose to 73.68 US cents as at 8am in Wellington and earlier touched 73.75 cents, the highest since Feb. 22, from 73.30 cents late yesterday. The trade-weighted index rose to 75.48 - above the 75 average level the Reserve Bank has projected for the second quarter - from 75.04 yesterday.
Trump tweeted that he and Xi "will make great progress together" and he was very thankful for President Xi's "kind words on tariffs and automobile barriers." He was responding to Xi's keynote address to the Boao Forum yesterday that set a conciliatory tone despite offering no substantial new concessions. The trade spat has overshadowed economic indicators, which included a drop in optimism among small US businesses and a stronger-than-expected US March PPI. Commodity-linked currencies were among the biggest gainers overnight.
"Calming comments from the Chinese president, plus a generally risk-on mood, contributed to a decent rally in commodity currencies, with the NZD/USD hitting levels not seen since February," said Miles Workman, an economist at ANZ Bank New Zealand, in a note. "Risk on returned after President Xi eased trade war fears in his speech yesterday. A second wind followed after president Trump took to Twitter to thank Xi for his kind words."
With no local economic data scheduled for release today, traders may focus on April consumer confidence, Chinese PMI for March and a speech by Reserve Bank of Australia governor Philip Lowe later in the day.
The kiwi rose to 4.6263 yuan from 4.6130 yuan late yesterday. It edged up to 94.87 Australian cents from 94.76 cents and rose to 51.96 British pence from 51.68 pence. The kiwi traded at 59.61 euro cents from 59.50 cents and rose to 78.94 yen from 78.49 yen.