NZ dollar dips as doubts over North Korean summit saps optimism for US-China tensions
By Paul McBeth
May 23 (BusinessDesk) - The New Zealand dollar fell as doubts about whether US President Donald Trump will meet his North Korean counterpart Kim Jong-Un eroded earlier optimism over a thawing trade relationship between China and the US.
The kiwi declined to 69.28 US cents as at 8am in Wellington from 69.43 cents yesterday, having climbed as high as 69.74 cents overnight. The trade-weighted index decreased to 72.58 from 72.79.
Stocks on Wall Street fell, with the Dow Jones Industrial Average falling 0.7 percent, as optimism over the successful trade negotiations between the US and China abated when President Trump said there was a "very substantial chance" he won't meet Kim Jong-Un next month. The thawing trade tensions between the world's two biggest economies, which included increased Chinese imports of American agricultural and energy products, got a further boost with the US working on a reprieve for telecommunications group ZTE and China reducing tariffs on car imports.
"Moves were largely driven by geopolitical developments/headlines associated with China-US trade tensions, North Korean actions and Italian political developments," ANZ Bank New Zealand economists Con Williams and Philip Borkin said in a note. "The NZD/USD remains capped at 70 (US cents) with familiar ranges expected to hold today with little data, or new news, expected."
The kiwi dipped to 58.80 euro cents from 58.95 cents yesterday as investors digest the prospect of a populist coalition government in Italy between the Five Star Movement and the League, which is awaiting approval by the president.
No local data is scheduled for today, with tomorrow's update to the forecast farmgate milk price following Fonterra Cooperative Group's board meeting the next domestic event that may weigh on the currency.
The New Zealand dollar fell to 91.42 Australian cents from 91.62 cents yesterday and declined to 4.4110 Chinese yuan from 4.4258 yuan. It decreased to 76.81 yen from 77.01 yen yesterday and declined to 51.56 British pence from 51.74 pence.