NZ dollar may gain as US, China trade talks bolster investor confidence
By Paul McBeth
Aug. 20 (BusinessDesk) - The New Zealand dollar may extend gains as the prospect of US and China returning to the
negotiating table soothed investors who were unsure whether a full-blown trade war would erupt.
The kiwi traded at 66.32 US cents as at 8am in Wellington from 66.36 cents on Friday in New York, and up from 65.91
cents in Asia last week. The trade-weighted index was at 71.95 from 71.97 last week.
The local currency sank to a two-and-a-half year low earlier this month as uncertainty over trade relations between the
US and China was compounded by New Zealand's Reserve Bank signalling a flat interest rate track and raising the prospect
of a cut, and fears that emerging market economies were coming under pressure. A trade war is seen as weighing heavily
on New Zealand, which counts China as its largest foreign market and the US as its third-biggest. A Wall Street Journal
report that negotiators are trying to end their stoush ahead of planned meetings between US President Donald Trump and
Chinese President Xi Jinping in November allayed some concerns.
"The NZD ended the week on a slightly stronger footing as the possibility of renewed US-China trade talks surfaced," ANZ
Bank New Zealand chief economist Sharon Zollner and economist Philip Borkin said in a note. "Whether anything comes of
the talks remains to be seen (and they aren’t until November), but with the kiwi looking oversold on some short-term
technical indicators we could see some mild retracement this week."
No local data is scheduled for today in a quiet week for economic data. The annual central bankers' conference at
Jackson Hole, Wyoming will be watched with Federal Reserve chair Jerome Powell scheduled to speak.
The kiwi edged up to 90.73 Australian cents from 90.61 cents last week and increased to 4.5588 Chinese yuan from 4.5575
yuan. It traded at 59.97 euro cents from 59.96 cents on Friday and was at 52.03 British pence from 52.10 pence. The
local currency traded at 73.30 yen from 73.27 yen last week.
(BusinessDesk)
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