NZ dollar trades in tight range as investors grow nervous over US-China trade
By Paul McBeth
Feb. 11 (BusinessDesk) - The New Zealand dollar stuck to a tight trading range as investors remain pessimistic over the ability of US and Chinese trade negotiators to find common ground before their March deadline.
The kiwi traded at 67.40 US cents at 8am in Wellington from 67.44 cents on Friday in New York and 67.50 cents in Asia last week. The trade-weighted index was at 73.11 form 73.15 last week.
Investors had hoped the trade talks would make some headway last week, but that optimism was dashed when US President Donald Trump said he wouldn't meet his Chinese counterpart, Xi Xinping, before new tariffs are imposed on China next month. The trade stoush between the world's two biggest economies has weighed on financial markets, with traders fearing it would trigger a global economic slowdown and crimp corporate earnings.
Investor sentiment was also weighed down by US policymakers failing to agree on a new budget. The US Federal government shut down for a record 35 days at the start of this year, as the Democrat-controlled Congress refused to fund Trump's planned wall on the Mexican border.
"Global markets traded with a risk-off tone for most of Friday after Trump said he wasn’t planning to meet President Xi before US tariffs on China are due to step-up" in early March, Bank of New Zealand interest rate strategist Nick Smyth said in a note. "The NZD was little changed on the day, but NZ rates experienced another sizable fall, with the 10 year NZ government bond yield hitting a record low level."
No local data is scheduled for today. Traders are awaiting the Reserve Bank's first monetary policy statement of the year on Wednesday, with the market pricing in a growing chance of a rate cut.
The local currency slipped to 94.96 Australian cents from 95.11 cents last week, and decreased to 4.5445 Chinese yuan from 4.5499 yuan. It traded at 59.52 euro cents from 59.56 cents last week and was little changed at 52.06 British pence from 52.11 pence. The kiwi traded at 73.94 yen from 74.04 yen last week.