NZ dollar gains as Bannon ousted, Jackson Hole looms; Labour gains in poll
By Jonathan Underhill
Aug. 21 (BusinessDesk) - The New Zealand dollar rose as news that US President Donald Trump had dumped adviser Steve
Bannon kept politics to the fore and traders looked ahead to the central bank meeting at Jackson Hole, Wyoming, where
Federal Reserve chair Janet Yellen is due to speak.
The kiwi traded at 73.11 US cents as at 8:30am in Wellington from 73.12 cents in New York on Friday and up from 72.95
cents in Wellington at the end of last week. The trade-weighted index was at 77 from 76.99 in New York.
The White House confirmed on Friday that Bannon is the latest adviser to leave the administration and there was debate
among traders on whether that could encourage Trump to push policies he campaigned on that would aid the US economy,
such as tax cuts. At Jackson Hole, Yellen may provide clues to the prospects for further rate hikes and the unwind of
the Fed's balance sheet while European Central Bank president Mario Draghi may comment on ending Europe's quantitative
easing.
"With Yellen and Draghi both due to speak, markets will no doubt be sensitive to any discussion on upcoming policy
withdrawal and what it could mean for the global liquidity cycle," said Philip Borkin, senior economist at ANZ Bank New
Zealand. "More dovish language and inflation misses have seen markets pare back expectations for ongoing Fed hikes this
year."
Locally today traders will be watching for travel and migration data for July to see whether net immigration, a key
plank of the economy's growth, is continuing at record levels.
Meanwhile, the NZ Herald reported that an internal UMR poll for Labour showed the main opposition party had gained 1
point to 37 percent while National was down 3 points to 40 percent, while the Greens were steady on 8 percent,
indicating the election may not be a shew-in for National as some had been expecting.
"The general election, in just over 30 days, is shaping as extremely close, and this uncertainty could at the very least
act as somewhat of a cap on NZD strength over the next few weeks," Borkin said.
The kiwi traded at 62.14 euro cents, little changed from 62.12 cents on Friday in New York. It was unchanged at 56.80
British pence and traded at 4.8764 yuan from 4.8758 yuan. The local currency slipped to 92.15 Australian cents from
92.25 cents and was little changed at 79.92 yen.
(BusinessDesk)
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