NZ dollar extends slide as Philly Fed lifts sentiment in US

By Gavin Evans

Jan. 18 (BusinessDesk) - The New Zealand dollar extended its decline as US investors looked for positive signs in their economy and European manufacturers prepared for the worst from the on-going Brexit impasse.

The kiwi was trading at 67.46 US cents at 8:30am from 67.60 cents late yesterday and at 51.96 British pence from 52.50 pence yesterday. The trade-weighted index was at 73.06 from 73.20 last night.

The kiwi dipped as low as 67.30 cents overnight amid weak equity markets in Europe and Asia. US stocks, after three days of gains, were also more measured on mixed earnings results. The S&P500, already at a one-month high, was recently up 0.5 percent.

Westpac said global markets had “rebounded from earlier caution” triggered by comments yesterday from US Senate finance committee chairman Charles Grassley that President Donald Trump was “inclined” to impose tariffs soon on car imports.

“The US dollar firmed slightly overnight. A surprising rebound in the regional US Philly Fed business survey for January helped stabilise sentiment,” Westpac said in a note to clients.

The current activity index in Philadelphia Federal Reserve’s January manufacturing outlook survey rose to 17, from a two-year low of 9.1 in December.

In Europe, the pound climbed to a two-month high against the euro as UK Prime Minister Theresa May tries to pull together an alternative Brexit plan to bring to parliament by the end of the month.

France has announced 50 million euros of emergency spending to hire more customs staff and veterinary inspectors and build extra parking and storage at the country’s ports and airports.

Dieter Kempf, head of the German Federation of Industry, said firms are already shifting staff and preparing to down tools in April in case a “chaotic” Brexit results. A no-deal Brexit would place German trade with the UK under more restrictions than the rules for Turkey, South Korea or Ghana, he told the Telegraph.

UK Chancellor Philip Hammond told a business conference call after May’s earlier plan was voted down on Tuesday that a large majority of MPs across the house will oppose a ‘no-deal’ option in any circumstances. Getting more time from the EU would be impossible without a clear plan, he said.

Against the Australian dollar, the kiwi was at 94.03 from 94.31 cents late yesterday. It eased to 73.52 Japanese yen, from 73.60, to 59.26 euro cents from 59.34, and to 4.5708 Chinese yuan from 4.5729.

(BusinessDesk)

ends

© Scoop Media