NZ dollar falls on strong US housing data, reduced impeachment fears
By Gavin Evans
Sept. 26 (BusinessDesk) - The New Zealand dollar fell after impeachment fears in the US eased and markets there bounced
on stronger than expected house sales data and more optimistic talk on the China-US trade stoush.
The kiwi was trading at 62.75 US cents at 8am in Wellington from 63.22 cents at 5pm. The trade-weighted index was at
70.06 from 70.44.
US markets were boosted by Commerce Department data showing new home sales increased by 7.1 percent in August, about
twice the median expectation from a Reuters poll of economists. That lifted the annual rate to 713,000 units, up from an
upwardly revised 666,000 units in July.
Fears that President Donald Trump could face impeachment, which roiled markets the day before, also eased after
publication of a transcript of his conversation with Ukraine President Volodymyr Zelensky. The Democrats allege Trump
had pressured Zelensky to help investigate Joe Biden, their presidential candidate.
“The removal of Trump from office via impeachment is looking less likely,” BNZ senior markets strategist Jason Wong
said.
“The Department of Justice reviewed the call and determined that there was no campaign finance violation and that no
further action was warranted. The Democrats might still proceed with the case for impeachment, but it’s a politically
risky strategy and markets already seem to have 'moved on'."
US stocks also rose after President Donald Trump said a trade deal with China could happen sooner than people think. The
day before he startled markets by insisting he wouldn't accept a bad deal. Senior officials from both sides are due to
resume talks early next month.
“They want to make a deal very badly... It could happen sooner than you think,” Reuters reported Trump telling reporters
in New York.
Wong noted the kiwi dollar’s “fleeting” jump to almost 63.50 US cents yesterday after the Reserve Bank left its official
cash rate unchanged, as expected, at 1 percent. Comments from the bank were a little more dovish than some had expected.
“The uncertainties the bank outlined in the minutes of the meeting were weighed to the downside – global trade,
geopolitical tensions, low business confidence, a possible delay to government spending, and lower inflation
expectations in response to ongoing low inflation,” Wong said in a note to clients. “The list of upside risks was much
smaller, noting upside potential for labour and import costs.”
The kiwi firmed a little against the British pound overnight where Prime Minister Boris Johnson has challenged his
opponents to table a vote of no confidence in the government and force an election. Parliament, and his Brexit plans,
face paralysis otherwise, he told the House of Commons.
The kiwi was at 92.91 Australian cents from 93.20, at 50.77 British pence from 50.70, at 57.32 euro cents from 57.49, at
67.61 yen from 67.86, and at 4.4749 Chinese Yuan from 4.5008.
(BusinessDesk)
ends