NZ dollar remains weak against Aussie as fears of global trade war recede
By Rebecca Howard
May 14 (BusinessDesk) - The New Zealand dollar remained weak against the Australian dollar as sentiment across the Tasman was boosted by waning fears of a global trade war.
The kiwi traded at 92.15 Australian cents as at 5pm in Wellington from 92.25 Australian cents as at 8 am and 92.31 cents on Friday in New York. It was at 69.61 US cents from 69.66 cents on Friday in New York.
The Australian dollar benefited more than the kiwi on signs of improving US-China relations. Sentiment got a lift from news that US President Donald Trump instructed the US Commerce Department to help Chinese telecommunications group 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.
"Certainly fears of an all-out trade war have died away a lot and that's arguably one of the reasons why the New Zealand dollar is underperforming against the Aussie as the general perception is that Australia is more vulnerable... so it's more relief for them," said ANZ Bank senior macro-strategist Phil Borkin.
Also the kiwi is "trying to test that 92.00 cent level on ongoing momentum in that cross following the RBNZ last week," he said. The central bank last week kept the official cash rate at 1.75 percent said the direction of the next move is equally balanced and could be up or down.
Borkin said news that the New Zealand's services sector activity, which accounts for about two-thirds of the economy, dropped back in April but remained above the long-run average, may also have weighed on the currency at the margin.
Looking ahead, Borkin said the main event for the kiwi dollar will be Thursday's budget as well as any international factors.
The trade-weighted index was at 72.62 from 72.69 last week.
It traded at 4.4122 Chinese yuan form 4.4111 yuan and at 58.21 euro cents from 58.30 cents last week and 51.32 British pence from 51.53 pence. The kiwi was almost unchanged at 76.14 yen from 76.18 yen.
New Zealand's two-year swap rate fell 2 basis points to 2.18 while the 10-year swaps fell 2 basis points to 3.13 percent.