By Rebecca Howard
Aug. 26 (BusinessDesk) - The New Zealand dollar fell on renewed concerns about US-China trade tensions as both sides announced further tariffs.
The kiwi was trading at 63.77 US cents at 7:50am in Wellington from 64.02 late Friday in New York. The trade-weighted index was at 71.02 points from 71.27.
US President Donald Trump said Friday he will raise existing duties on US$250 billion in Chinese products to 30 percent from 25 percent on Oct. 1. Tariffs on another US$300 billion in Chinese goods, which start to take effect on Sept. 1, will now be 15 percent instead of 10 percent. The move came after China unveiled retaliatory tariffs on US$75 billion worth of US goods.
Trump also said he was ordering US companies to find “alternatives” to China, including closing operations there and moving production to the United States, according to Reuters.
Reuters also reported that US Treasury Secretary Steven Mnuchin said Trump could order companies out of China under the International Emergency Economic Powers Act if he declared a national emergency.
"Risk assets took a hit on Friday and safe-haven assets soared, as US-China trade tensions dramatically escalated," said ANZ Bank economist Michael Callaghan. "There is an uneasy feeling that the very fragile US-China trade negotiations are spiralling out of control."
The trade tensions overshadowed US Federal Reserve Chair Jerome Powell's much-anticipated speech at the Jackson Hole gathering of central bankers. He hinted that the US Federal Reserve will cut interest rates at its September meeting, but did little to clarify its intentions beyond that, said Capital Economics.
Callaghan said, however, highlighted significant risks to the economy from external economic developments and trade frictions. "Taken together with the tariff news, market pricing for US rate cuts increased slightly."
Today, investors will be watching overseas merchandise trade data for July. Economists polled by Bloomberg are expecting a monthly deficit of $254 million versus a surplus of $365 million in June.
The New Zealand dollar was trading at 94.57 Australian cents from 94.86, at 52.01 British pence from 52.05, at 57.11 euro cents from 57.30, at 67.01 yen from 67.31 and at 4.5231 Chinese yuan from 4.5301.