NZ dollar treads water as G7 leaders' summit ends in disarray
By Paul McBeth
June 11 (BusinessDesk) - The New Zealand dollar started the week on the backfoot after a war of words between US President Donald Trump and his G7 allies saw the leaders' summit end in disarray, and put investors on the defensive.
The kiwi traded at 70.29 US cents as at 8am in Wellington from 70.31 cents at the New York close last week and 70.25 cents in late Asia trading. The trade-weighted index was at 73.66 from 73.65 last week.
Trump retracted his endorsement of the G7 communique in response to Canada's opposition to US tariffs, accusing Prime Minister Justin Trudeau of engaging in "bad faith diplomacy" after G7 leaders had put on a show of unity to play down divisions on trade. Investors had low expectations for the summit in what's been a heightened period of geopolitical uncertainty, and will be watching Trump's upcoming meeting with North Korean leader Kim Jong Un to see if meaningful steps towards denuclearisation can help ease those tensions.
"The fallout from the G7 meeting could set the tone early this week and keep ‘risk’ (and hence the NZD) on the defensive," ANZ Bank New Zealand senior macro strategist Phil Borkin said in a note. "With the only real conclusion being that trade uncertainties are going to persist, the NZD could find itself on the back foot. That said it is likely to take a lot to break it out of recent ranges."
Local data today include March quarter survey of manufacturing, which will help economists firm up their forecasts for first quarter gross domestic product.
Investors will be keeping an eye on US inflation figures on Tuesday ahead of policy meetings at the Federal Reserve, European Central Bank and Bank of Japan.
The kiwi gained to 92.61 Australian cents from 92.31 cents on Friday in New York and increased to 4.5007 Chinese yuan from 4.4988 yuan. It traded at 59.68 euro cents from 59.71 cents last week and was little changed at 52.38 British pence from 52.41 pence. The kiwi decreased to 76.81 yen from 76.96 yen last week.