NZ dollar range-bound as global slowdown risk weighs on sentiment
By Rebecca Howard
Nov. 22 (BusinessDesk) - The New Zealand dollar stuck to a tight range as markets continue to fret about a possible global economic slowdown.
The kiwi traded at 68.11 US cents at 5pm in Wellington from 68.36 US cents at 8am and from 67.96 cents yesterday. The trade-weighted index was at 74.34 from 74.28.
Markets are increasingly jittery about a negative impact on global growth while the US-China trade dispute remains unresolved. Overnight the Organisation for Economic Cooperation and Development revised down growth forecasts for most of the world's major economies and said global growth is now expected to expand by 3.5 percent in 2019, down from its prior forecast of 3.7 percent.
“Trade conflicts and political uncertainty are adding to the difficulties governments face in ensuring that economic growth remains strong, sustainable and inclusive," said OECD secretary-general Angel Gurria in a statement presenting the outlook.
The kiwi was "reasonably becalmed today" but sentiment is fragile, said Martin Rudings, senior foreign exchange dealer at OMF. He noted markets are quiet ahead of the US Thanksgiving Day Holiday and "chances are it should probably be reasonably subdued overnight," he said.
However, volatility will likely increase ahead of the G20 meeting in Argentina at the end of the month where President Donald Trump and Chinese President Xi Jinping are due to sit down. If there is no resolution, Rudings said he would expect further US dollar strength, which will weigh on the kiwi.
The kiwi traded at 59.76 euro cents from 59.73 cents yesterday and increased to 53.28 British pence from 53.12 pence yesterday. It traded at 93.92 Australian cents from 93.94 cents, rose to 76.93 yen from 76.60 yen yesterday and eased to 4.7182 Chinese yuan from 4.7198 yuan.
New Zealand's two-year swap rate fell 1 basis point to 2.13 percent; the 10-year swaps were down 2 basis points at 2.98 percent.