NZ dollar firms with improved US outlook

NZ dollar firms with improved US outlook; RBNZ speech no distraction

By Jenny Ruth

March 29 (BusinessDesk) - The New Zealand dollar rose after the US dollar firmed amid a small recovery in bond yields and with US shares looking likely to end the quarter on a slightly better note.

The kiwi was trading at 67.84 US cents at 5pm in Wellington from 68.06 at the same time yesterday and 67.83 at 8am this morning.

It’s down about a cent from 68.75 where it finished in New York last Friday, reflecting the Reserve Bank’s abrupt change of stance on Wednesday. It said the next move in the official cash rate is likely to be down compared with February’s statement when the next move could have been either up or down.

“Stock markets seem to be going into the quarter’s end slightly less worried than they were," says Peter Cavanaugh, the senior adviser at Bancorp Treasury Services. "The world’s a less worried place and more confident about the US.”

Investors have been fretting over whether US three-month yields rising above those on 10-year Treasury notes, usually a classic signal of approaching recession, actually does mean the that is going to happen.

The benchmark S&P 500 Index rose 0.36 percent on Thursday and is headed for a 12 percent gain for the quarter.

After trending lower all week and reaching a low at 2.3419 percent on Thursday, the yield on the 10-year Treasury note has risen to 2.4070.

New Zealand two-year swap rates rose to 1.6156 percent from 1.6125 yesterday. The 10-year swap rate rose to 2.1450 percent from 2.0775 at yesterday’s close and yesterday’s record low of 2.02 percent.

A speech by Reserve Bank governor Adrian Orr today contained little to move the market and so “the focus has really been everywhere else” Cavanaugh said, citing matters such as the US-China trade talks and Brexit debates in the UK.

“The only certainty on Brexit is it won’t happen today and we still don’t know when, where and what will happen,” he says.

The latest news on the trade talks is that US Treasury Secretary Steven Mnuchin said in Beijing today that he had “a productive working dinner” on Thursday with unnamed Chinese officials.

The New Zealand dollar was at 95.71 Australian cents from 95.82 and at 51.91 British pence from 51.96. It was unchanged at 60.40 euro cents, at 75.08 Japanese yen from 75 and at 4.5599 Chinese yuan from 4.5698. The trade-weighted index was at 73.66 points from 73.72.

(BusinessDesk)

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