NZ dollar weakens on strong US data, trade tensions

By Rebecca Howard

May 17 (BusinessDesk) - The New Zealand dollar opened weaker after stronger than expected US data gave the greenback a lift and as trade tensions continue to dampen risk appetite.

The kiwi was trading at 65.37 at 8am in Wellington versus 65.51 late yesterday. The trade-weighted index was at 72.04 from 72.06.

The Philadelphia Fed manufacturing index for May rose to a four-month high of 16.6 after registering 8.5 in April, MarketWatch reported. Economists had expected 10.1. The Commerce Department also reported that groundbreaking on new US homes was higher than expected in April.

"Kiwi’s demise continued after a small recovery led to a proportionately larger sell-off overnight. Solid US data saw the USD strengthen broadly once again," said ANZ Bank FX/rates strategist Sandeep Parekh.

Trade tensions, however, continue to percolate, in particular after the US Department of Commerce announced it will be adding Huawei Technologies Co. Ltd. and its affiliates to the so-called Entitty List, which bars it from acquiring components and technology from U.S. firms without government approval.

"This action stems from information available to the department that provides a reasonable basis to conclude that Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interest," it said.

Domestically, investors will be watching for the Business NZ performance of manufacturing index which could "provide some respite," said Parekh.

The kiwi traded at 51.08 British pence from 50.97 after Prime Minister Theresa May agreed to announce her departure timetable in June, regardless of whether a Brexit deal is reached. "Brace yourselves, volatility is coming," said Parekh.

The kiwi was trading at 94.79 Australian cents from 94.72, at 4.5982 Chinese yuan from 4.5048, at 58.46 euro cents from 58.42, and at 71.77 Japanese yen from 71.69.

(BusinessDesk)

ends

© Scoop Media