NZ dollar firms as investors await outcome of US-China trade talks
By Rebecca Howard
May 10 (BusinessDesk) - The New Zealand dollar firmed on improved prospects for a deal out of US-China trade talks this week.
The kiwi was trading at 65.91 US cents at 8am in Wellington from 65.72 US cents yesterday. The trade-weighted index was at 72.15 points from 71.98.
Markets were weighed by escalating trade tensions overnight but sentiment got a lift when President Donald Trump reiterated a deal is still possible this week, even as he plans to raise tariffs on US$200 billion of Chinese goods within hours to 25 percent from 10 percent. Trump said he had received a "beautiful" letter from his Chinese counterpart Xi Jinping and may speak to him by phone.
The two sides are still meeting in Washington with talks to wrap up Friday in the US.
"Unsurprisingly, markets were focused on the US-China trade talks with expectations low that there will be any resolution to the impasse this week, until last minute comments from President Trump that a deal could still be reached," said ANZ Bank economist Michael Callaghan.
With little domestic data, the focus will remain offshore for direction. Callaghan said the kiwi has support around 65.60 US cents and faces resistance at 66.70. The Reserve Bank of Australia's statement on monetary policy will be watched as it may shed some light on why they decided to hold rates at 1.50 percent at this week's meeting. The RBA's decision contrasted with that of the Reserve Bank of New Zealand, which opted to cut rates by 25 basis points to 1.50 percent, adding to pressure on the kiwi.
The domestic currency was trading at 94.26 Australian cents from 94.25. It was at 50.64 British pence from 50.50. It was at 58.73 from 58.70 euro cents, at 72.30 Japanese yen from 72.25, and at 4.4981 Chinese yuan from 4.4737.