NZ dollar sticks to tight range; awaits US-China developments
By Rebecca Howard
May 15 (BusinessDesk) - The New Zealand dollar is a tad weaker but largely range-bound as markets await further US-China trade developments.
The kiwi was trading at 65.72 US cents at 8am in Wellington from 65.83 at 5:20pm. The trade-weighted index was at 72.22 from 72.49.
Sentiment improved after US President Donald Trump referred to the escalating trade war with China as “a little squabble,” adding that there is a "good dialogue going.”
"It was risk-on night overnight," said Westpac Bank head of NZ market strategy Imre Speizer.
He said the kiwi stuck to the middle of the range, having already "jumped very quickly yesterday afternoon" in Wellington when the US stock market futures turned positive. "It had a very sharp bounce that really pre-empted the whole thing."
Any US-China news will continue to drive sentiment but the New Zealand central bank's easing bias is also playing a part.
"If the RBNZ sees evidence global or domestic activity is slowing, then the chance of another official cash rate cut will rise and the NZD will fall," Speizer said.
The kiwi also remains firm against the Aussie, with both currencies weighed by a possible slowdown in the economy of key trading partner China. It was trading at 94.66 Australian cents versus 94.63 late yesterday.
Speizer said the kiwi is benefiting from the policy positions of the two central banks. While the Reserve Bank of Australia kept rates on hold last week, they are likely to cut in August and November, while the RBNZ is more likely to remain on hold for some time, said Speizer. He also noted some uncertainty around this weekend's federal election.
Looking ahead, he said investors will be keeping a close eye on China data today including retail sales and industrial production.
The kiwi was trading at 4.5174 Chinese yuan from 4.5190, at 50.91 British pence from 50.78, at 58.61 euro cents from 58.55, and at 72.04 Japanese yen from 72.17.