NZ dollar little changed as market awaits US-China trade developments
By Jenny Ruth
May 10 (BusinessDesk) - The New Zealand dollar was little changed as the market awaits further news on the US-China trade negotiations.
That was despite new tariffs that President Donald Trump imposed on Chinese imports into the US kicking in late in the New Zealand day.
The kiwi was trading at 65.87 US cents at 5pm in Wellington from 65.91 at 8am. The trade-weighted index was at 72.10 points from 72.15.
The tariffs on about US$200 billion of Chinese goods will increase to 25 percent from 10 percent.
“We’ve seen limited reaction to it for two reasons," said Mike Houlahan, a senior foreign exchange dealer at XE. "One is the trade talks are ongoing so they’re still trying to reach an agreement and, two, the increased tariffs only apply to goods that leave China from tomorrow onwards.
“Anything that’s already in transit, it won’t affect,” Houlahan says. By the time goods shipped tomorrow arrive in the US, the new tariffs may have been reversed. As well, the impact of the new tariffs had already been baked into market pricing since Trump tweeted about them last weekend.
A delegation led by China’s Vice-Premier Liu He began a fresh round of talks last night, New Zealand time. Talks are set to resume tonight.
“If they do reach an agreement, we’re probably going to see the Aussie dollar rebound and the kiwi dollar to a lesser extent,” Houlahan says.
“We live in a world where kicking the can down the road seems to be the main outcome of these negotiations.”
On Thursday afternoon, Washington DC time, Trump vacillated between threatening China and suggesting a deal was still possible.
Trump said that China’s President Xi Jinping had sent him a “beautiful letter” but that the alternative to a trade deal was “an excellent one” that would bring “billions” into the US government.
The New Zealand dollar was unchanged at 94.26 Australian cents and unchanged at 50.64 British pence. It was trading at 58.67 euro cents from 58.73, at 72.25 Japanese yen from 72.30, and at 4.4878 Chinese yuan from 4.4981.
The New Zealand two-year swap rate rose to 1.6085 percent from 1.6005 yesterday while the 10-year swap rate fell to 2.1225 percent from 2.1300.