NZ dollars firms on soft US GDP, G20 trade hopes

By Rebecca Howard

June 28 (BusinessDesk) - The New Zealand dollar extended its gains against the greenback amid soft US data and growing optimism ahead of a meeting between the US and China at the G20 summit in Japan this weekend.

The kiwi was trading at 67.00 US cents at 8 am in Wellington versus 66.81 US cents at 5pm. The trade-weighted index was at 73.08 from 72.96.

The kiwi got a lift when the third and final estimate of US gross domestic product came in at 3.1 percent versus an expected 3.2 percent. While the number was in line with expectations, personal consumption growth - the largest component - was trimmed from 1.3 percent to 0.9 percent, adding to worries about a domestic slowdown.

Markets, however, are waiting on talks between President Donald Trump and Chinese counterpart Xi Jinping. While investors were cheered by reports the two sides had agreed a truce ahead of the talks, Trump's economic advisor Larry Kudlow poured cold water on that when he told CNBC that there had been no specific agreements ahead of the meeting.

According to the Wall Street Journal, Xi plans to present Trump with a set of terms the US should meet before Beijing is ready to settle the trade confrontation.

The report cited Chinese officials with knowledge of the plan who said Beijing is insisting the ban on the sale of US technology to Chinese telecommunications giant Huawei Technologies be removed.

Despite all this, markets seem to be in a "hope for the best mode," said Kiwibank trader Mike Shirley.

ANZ Bank FX/rates strategist Sandeep Parekh said that the hope is that trade talks will resume, additional US tariffs will be delayed for a period of time, and China will buy more US goods.

"As the complexity of resolving economic aspirations between the two countries is a herculean task, markets remain cautious."

The kiwi was trading at 95.59 Australian cents from 95.50. It was at 52.87 British pence from 52.66, at 58.91 euro cents from 58.83, at 72.19 yen from 72.18, and at 4.6071 Chinese yuan from 4.5957.

(BusinessDesk)

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