NZ dollar falls below 68 US cts as markets respond to US-China trade standoff
By Jonathan Underhill
July 12 (BusinessDesk) - The New Zealand dollar fell below 68 US cents on heightened trade tensions between the US and
China, which weighed on commodity-related currencies.
The kiwi dropped to 67.63 US cents as at 8am in Wellington from 68.09 cents late yesterday. The trade-weighted index was
at 72.46 from 72.79 yesterday.
China called the US announcement of tariffs on an extra US$200 billion of Chinese goods as "totally unacceptable" and
vowed to retaliate, although it doesn't buy enough from the US to match it dollar for dollar. The CRB Index of commonly
traded commodities dropped 3 percent overnight, stocks on Wall Street declined and the kiwi, Australian and Canadian
dollars fell.
"US-Chinese trade tensions have stepped up a notch, and we’ve unsurprisingly seen commodity currencies and emerging
market currencies put under pressure," said Liz Kendall, senior economist and ANZ Bank New Zealand, in a note.
"Stretched positioning or not, the NZD is going to face plenty of challenges if trade tensions persist (which it looks
like they will)."
ANZ says the New Zealand dollar will find support at around 67.60 US cents and will encounter resistance if it rises as
high as 68.60 cents.
Today traders are likely to keep an eye on June food prices ahead of next week's inflation report and across the Tasman
today, Australian consumer inflation expectations are due. US inflation figures are scheduled for release tonight.
The kiwi dollar traded at 75.66 yen from 75.60 yen yesterday, with Japan's currency, typically seen as a safe haven for
investors. New Zealand counts China as its biggest trading partner and the US as its third-biggest.
The NZ currency fell to 4.5099 yuan from 4.5367 yuan and traded at 91.73 Australian cents from 91.85 cents.
The kiwi fell to 51.14 British pence from 51.35 pence and declined to 57.85 euro cents from 58.05 cents.
(BusinessDesk)
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