NZ dollar rises on strong domestic exports, Trump comments on Powell
By Rebecca Howard
June 25 (BusinessDesk) - The New Zealand dollar firmed on strong domestic trade data and after the greenback lost
further ground when US President Donald Trump asserted that he has the power to remove the head of the US Federal
Reserve.
The kiwi was trading at 66.47 US cents at 5pm in Wellington versus 66.16 at 8am. The trade-weighted index was at 72.53
from 72.20.
The kiwi got a lift after Stats NZ reported a wider-than-expected May trade surplus thanks to record exports. Exports
reached $5.8 billion in May, up 8.5 percent from a year earlier, while imports rose 7.6 percent to $5.5 billion. The May
trade surplus was $264 million. Economists polled by Bloomberg had expected $200 million.
The currency then jumped following comments from Trump regarding his ability to remove Federal Reserve chairman Jerome
Powell if he thinks that is the appropriate course of action. Trump has been upping the pressure on Powell to cut
interest rates to help stimulate the economy
In an exclusive interview with The Hill, Trump said Powell is "incorrect" that he is entitled to serve a four-year term
that expires in 2022. Asked if he thinks he has the power to remove Powell, Trump said "If I wanted to, but I have no
plans to do anything.”
"That came around lunch time and it really kicked the kiwi off," said Mike Shirley, a dealer at Kiwibank. "The kiwi is
sort of a win by default as the US dollar is coming off because of the potential risks," he said.
The kiwi fared better than the Australian dollar and was trading at 95.50 Australian cents from 95.03 cents this
morning.
Shirley said markets are now waiting for tomorrow's rate decision at the Reserve Bank of New Zealand. All 20 economists
surveyed by Bloomberg expect the official cash rate to stay on hold at 1.50 percent but Shirley noted markets are
pricing in a 20 percent chance of a cut. "There's a one in five chance of a cut tomorrow. It seems unlikely but
historically they have cut on these market odds," he said.
The New Zealand dollar was trading at 52.12 British pence from 51.93 British pence, at 58.26 euro cents from 58.06, at
71 yen from 70.97, and at 4.5741 Chinese yuan from 4.5458.
The New Zealand two-year swap rate firmed to 1.2951 percent from 1.2885 late yesterday, while the 10-year swap rate
eased to 1.7375 percent from 1.74.
(BusinessDesk)