NZ dollar holds below 70 US cts as US, China trade tensions ease
By Paul McBeth
May 14 (BusinessDesk) - The New Zealand dollar held below 70 US cents after US President Donald Trump told the Commerce Department to help Chinese telecommunications group ZTE, allaying concerns about heightened trade tensions between the world's two biggest economies.
The kiwi traded at 69.63 US cents as at 8am in Wellington from 69.66 cents on Friday in New York, and 69.60 cents last week in Asia. The trade-weighted index was at 72.68 from 72.69 last week.
Trump instructed the US Commerce Department to help ZTE after the agency recently banned China's second-biggest telecommunications group from sourcing US components for its devices, putting the firm on the verge of bankruptcy. The move follows a meeting between US and Chinese trade negotiators earlier this month where ZTE's situation was a sticking point for China. Trade tensions between the nations have been seen as potentially slowing global growth and weighing on trade-dependent nations' currencies such as the kiwi and Australian dollars.
When US and China trade negotiators met earlier this month, the Chinese side demanded the US reverse these measures on ZTE, and the President’s decision to do so will be seen as a key concession in the negotiations," Bank of New Zealand interest rate strategist Nick Smyth said in a note. "Liu He, China’s vice-premier and economic advisor to President Xi (Jinping), may visit the US this week to resume talks on trade and Trump’s announcement on ZTE should help support risk assets to start the week."
Local data today include the Business New Zealand-BNZ performance of services index and March quarter living-costs price index. Domestically, Thursday's budget is the key event, and follows the Reserve Bank of New Zealand last week keeping the official cash rate at 1.75 percent and delaying the forward rate track.
The kiwi traded at 92.25 Australian cents from 92.31 cents on Friday in New York and decreased to 4.4099 Chinese yuan form 4.4111 yuan. It traded at 58.27 euro cents from 58.30 cents last week and fell to 51.39 British pence from 51.53 pence. The kiwi was almost unchanged at 76.17 en from 76.18 yen.