NZ dollar gains as doubts about Trump's tax reforms weigh on greenback
By Jonathan Underhill
Sept. 29 (BusinessDesk) - The New Zealand dollar rose as doubts US President Donald Trump's economy-boosting tax reforms
will easily pass into law weighed on the greenback.
The kiwi rose to 72.31 US cents as at 8am in Wellington from 71.92 cents late yesterday. The trade-weighted index rose
to 76.26 from 76.03.
Trump this week proposed the biggest US tax overhaul in three decades, offering to lower the corporate income tax and
reduce the top income tax rate for individuals as well as cut taxes for small businesses but gave little detail how he
plans to plug the budget shortfall it would create. Overnight, US second-quarter economic growth was revised up to an
annualised 3.1 percent and eurozone economic confidence beat expectations with a reading of 113.
"Trump’s tax plan is out, but is lacking details, so markets do not have a lot to go on," said Cameron Bagrie, chief
economist at ANZ Bank New Zealand, in a note. "But the key question is how do you fund an additional US$1.5 trillion
over a decade without materially increasing the deficit and national debt? That alone sets up a huge battle in
Congress."
With bets on a third rate hike by the Federal Reserve this year now at 70 percent, while the Reserve Bank yesterday
reiterating interest rates are on hold, the kiwi still has more scope to decline, he said.
"Fed speakers have been universally upbeat and the data is printing above trend," he said. "It all points to higher US
rates and an erosion of the yield advantage that has long supported the NZD."
Traders are looking ahead to US PCE deflator figures tonight along with consumer prices for the eurozone. In New Zealand
today, building permits for August may provide more proof the housing market is cooling, while Japan has August CPI data
and China is scheduled to release the Caixin PMI manufacturing series for September.
The kiwi traded at 61.34 euro cents from 61.31 cents and at 53.78 British pence from 53.76 pence. It traded at 81.27 yen
from 81.28 yen, advanced to 92.04 Australian cents from 91.92 cents and gained to 4.8152 yuan from 4.7879 yuan.
(BusinessDesk)
ends