NZ dollar nudges higher as risk appetite returns

NZ dollar nudges higher as risk appetite returns

By Jenny Ruth

Jan. 28 (BusinessDesk) - The New Zealand dollar nudged higher against all major currencies amid continuing relief that at least one of the bugbears bedevilling global markets, the US government shutdown, has been resolved.

Trading was very quiet with much of the market on holiday for Auckland’s Anniversary Day and for Australia Day.

The kiwi was trading at 68.68 US cents at 5pm in Wellington from 68.37 cents at 8.30am. The trade-weighted index rose to 74.08 from 73.90.

President Donald Trump agreed to reopen the US government on Friday when the shut-down had reached a record 35 days, even though he still hasn’t got the US$5.7 billion he demanded to build a wall on the Mexican border.

While Trump is still threatening to close down the government again in three weeks when the temporary measure passed by both houses of Congress on Friday expires, most observers doubt there will be any enthusiasm among his fellow Republicans for another shut-down.

Martin Rudings, a dealer at OMF, says the market has also become somewhat more optimistic that Britain will solve its Brexit mess.

Ninety-two-year-old Queen Elizabeth weighed into the Brexit argument last week by suggesting those involved should be “considering the needs of others” and “coming together to seek out the common ground.”

Britain is set to leave the European Union on March 29, with or without a Brexit agreement with the EU. While they don’t agree on much, most protagonists agree that a “hard” Brexit with no agreement will be the worst of all possible worlds.

Rudings says investors are also looking ahead to the Federal Reserve’s open market committee meeting on Thursday New Zealand time for more clarification from chair Jerome Powell on his marked softening in attitude towards further rate hikes.

“The market’s going through a period of risk-on,” meaning more people are prepared to take risks than previously, he says.

Nevertheless, “I don’t think anybody is going to get too involved in position-taking on a Monday with all of those things coming up.”

The New Zealand dollar was trading at 95.35 Australian cents from 95.26, at 52.02 British pence from 51.84, at 60.13 euro cents from 59.75, at 75.09 Japanese yen from 74.84, and at 4.6213 Chinese yuan from 4.6114.

The two-year swap rate is trading at 1.8950 percent from 1.8921 on Friday; the 10-year swap rate is at 2.5700 percent from 2.5450.

(BusinessDesk)

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