NZ dollar gains vs greenback as Trump backtracks on Syria attack, rises vs yen, euro
By Jonathan Underhill
April 13 (BusinessDesk) - The New Zealand dollar rose against the US dollar after US President Donald Trump appeared to backtrack on his intention to attack Syria, reviving risk appetite and reducing demand for safe-haven currencies such as the yen.
The kiwi gained to 73.71 US cents as at 8am in Wellington from 73.58 cents late yesterday. It climbed to 79.06 yen, only the second time it has topped 79 yen since late February, from 78.68 yen yesterday. The trade-weighted index rose to 75.65 from 75.43.
Trump tweeted overnight that he "never said when an attack on Syria would take place" in retaliation for Bashar al-Assad's use of chemical weapons against rebels in the country's civil war. That allayed fears of an imminent strike that could have escalated to clashes with Russian forces supporting the al-Assad regime and heightened tensions in the Middle East. Separately US defence secretary Jim Mattis urged caution on Syria. Brent crude oil has edged up to as much as US$72.49 a barrel, the highest since November 2014.
"These developments have supported risk appetite a little and, additionally, speaking to lawmakers, Trump sounded more optimistic on the US-China trade situation, buoyed by President Xi’s speech earlier this week," Jason Wong, currency strategist at Bank of New Zealand, said in a note. "Market movements have been modest although there is still a notable grind up in the NZD, supported by a better risk backdrop."
Xi talked about an open economy and reduced trade barriers in a speech to an economic forum earlier this week. Adding to more positive sentiment on trade, are reports that Trump has asked trade advisers to investigate a US return to the Trans-Pacific Partnership, and comments from Trump that he is happy with progress over NAFTA negotiations.
In New Zealand today, traders will be watching for the March manufacturing PMI report, which is expected to show manufacturing remained in expansion mode last month.
The kiwi rose to 95.07 Australian cents from 94.95 cents late yesterday. It rose to 59.80 euro cents from 59.53 cents after figures showed euro-area industrial production declined for the third straight month. It traded at 51.82 British pence from 51.91 pence and rose to 4.6352 yuan from 4.6181 yuan.