NZ dollar holds gains as the start of US-China trade sanctions weigh on greenback
By Paul McBeth
July 9 (BusinessDesk) - The New Zealand dollar held on to its gains of late last week as trade sanctions kicked in between the world's two biggest economies, the US and China, sapping demand for the greenback.
The kiwi traded at 68.32 US cents as at 8.15am in Wellington from 68.39 cents on Friday in New York, and up from 68.03 cents in Asia. The trade-weighted index was at 72.91 from 72.74 last week.
The trade stoush between the US and China ratcheted up a notch on Friday with Asia's biggest economy retaliating immediately to the formal imposition of US tariffs on US$34 billion of goods, accusing the world's biggest economy of being "unfair". The White House has yet to respond, but US President Donald Trump has threatened to impose tariffs on all US$500 billion of Chinese imports.
Separately, US non-farm payrolls on Friday showed the world's biggest economy added 213,000 jobs last month, down from the 244,000 jobs created in May, with hourly earnings flat and a higher participation rate. The US dollar index fell 0.5 percent, extending its decline from a peak on Jun 28.
"The NZD was a beneficiary of higher risk appetite, which saw it close around 0.6840, just off its high for the week, and some 1½ cents higher from Tuesday’s low when China’s currency as at its weakest," Bank of New Zealand senior markets strategist Jason Wong said in a note. "From a technical point of view, the NZD now looks in much better shape than it did at the beginning of last week although fundamentally it remains vulnerable if US-China trade tensions increase to the next level. We await some direction from President Trump."
With no local data scheduled for today and school holidays likely to sap trading volumes, the local currency will take its cues from overseas.
The kiwi was unchanged at 75.42 yen from last week and edged up to 91.91 Australian cents from 91.82 cents on Friday in New York. It traded at 58.17 euro cents from 58.14 cents last week and was little changed at 51.26 British pence from 51.30 pence. The kiwi rose to 4.5382 Chinese yuan from 4.5329 yuan last week.