NZ dollar firms on improving risk appetite as US-China trade worries ease
By Rebecca Howard
Aug. 27 (BusinessDesk) - The New Zealand dollar found some support after risk appetite got a lift when US President
Donald Trump talked up the prospects of a trade deal with China.
The kiwi was trading at 63.83 US cents at 7:55 am versus 63.75 US cents at 5pm in Wellington. The trade-weighted index
was at 71.23 from 71.17.
Risk assets, like the kiwi dollar, benefited when Trump tweeted that he had "great respect for the fact that President
Xi & his representatives want 'calm resolution.' So impressed that they are willing to come out & state the facts so accurately. This is why he is a great leader & representing a great country. Talks are continuing."
Tensions flared late last week when Trump announced further tariffs on targeted Chinese goods after China unveiled
retaliatory tariffs of its own. Fuel was added to the fire when Trump said he wanted US companies to leave China.
According to Trump, however, US trade officials received overnight calls from the Chinese saying they wanted to return
to the table, CNBC reported.
"Markets rallied on relative trade optimism after Trump reported that China called wanting to restart talks," said ANZ
economist Michael Callaghan. "The NZD drifted up from fresh lows as safe-haven currencies slipped overnight," he said.
He noted, however, that the kiwi dollar has been "rising and falling as global risk appetite has waxed and waned on
trade headlines, but has dropped from just under 68 US cents in late July to under 64 US cents today."
He said the main drivers are commodity prices, interest rate differentials and global risk appetite.
"All up, while it will likely continue to be a bumpy ride, we remain comfortable with our forecast of the NZD/USD
declining to 0.61 by the end of the year," he said.
The New Zealand dollar was trading at 94.24 Australian cents from 94.65, at 52.22 British pence from 51.98, at 57.50
euro cents from 57.20, at 67.73 yen from 67.13 and at 4.5633 Chinese yuan from 4.5545.
(BusinessDesk)
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