NZ dollar heads for 0.7% weekly fall as global risk appetite wanes
By Rebecca Howard
Aug. 31 (BusinessDesk) - The New Zealand dollar is headed for a 0.7 percent weekly fall against the greenback as global
risk appetite wanes and the chances of a domestic rate cut grow.
The kiwi traded at 66.47 US cents at 5pm in Wellington versus 66.45 US cents at 8am in Wellington and 66.54 cents
yesterday. It was at 66.90 US cents last Friday in New York. The trade-weighted index was unchanged at 71.90.
Risk appetite waned in Asian trading after Bloomberg reported that US President Donald Trump wants to move ahead with a
plan to impose tariffs on $200 billion in Chinese imports. Investors were also jittery after the Argentine peso lost
nearly a fifth of its value on Thursday - falling to a record low versus the dollar - on concerns the South American
nation will struggle to pay its debts.
Domestically, the kiwi remained under pressure after the latest ANZ business outlook also showed little appetite among
firms to invest. The weak sentiment - coupled with a more dovish RBNZ prompted "markets to increase expectations the
monetary policy committee will cut the OCR within the next 12 months," said OFX Group in a note. Markets are now pricing
in a 40 percent chance of a rate cut within a year.
Alex Hill, head of dealing Australasia at HiFX in Auckland, said, however, while there are domestic issues - like the
business confidence in New Zealand or political ructions in Australia "the over-riding factor is the strengthening US
dollar."
While the kiwi may get pushed around by domestic factors any gains will be capped against a "backdrop of the Federal
Reserve raising rates and a central bank here that is very much on pause mode," Hill said.
The kiwi traded at 91.57 Australian cents from 91.35 cents yesterday and at 4.5413 Chinese yuan from 4.5448 yuan. It was
almost unchanged at 51.05 British pence from 51.06 pence and traded at 56.89 euro cents from 56.87 cents yesterday. The
kiwi dropped to 73.78 yen from 74.29 yen yesterday.
New Zealand's two-year swap rate rose 1 basis point to 1.97 percent. The 10-year swaps were unchanged at 2.82.
(BusinessDesk)