Kiwi holds as trade-war fears abate

The New Zealand dollar dipped slightly but continued to hover around a 2-week high against the greenback as Asian markets were cheered by hopes that a global trade war might be averted.

The kiwi traded at US72.88c at 5pm from US72.96c at 8am and US72.73c late on Monday. The trade-weighted index was at 74.53 from 74.64 on Monday.

Markets were cheered after reports Chinese and US officials were busy negotiating behind the scenes to avert an all-out trade war.

“The risk-on sentiment overnight kind of set the scene and there is a glimmer of hope that some compromise is brewing,” said Westpac Imre Speizer.

“Things don’t seem as bad as they did a couple of days ago on the global trade front,” he said, noting that equity markets had rallied strongly.

Investors had been spooked by a US threat to impose tariffs of up to US$60 billion ($82.4b) on Chinese goods and China’s announcement it would impose tariffs on US$3b of US exports, its first firm move in retaliation.

Speizer said the kiwi is also benefiting as overall the market remains quite negative toward the greenback as it “continues to factor in a pretty hefty risk premium to the US dollar”.

The kiwi rose to A94.14c from A94.12c on Monday. It traded at 51.20p from 51.33p and fell to 58.52 euro cents from 58.77c. It fell to 4.5621 yuan from 4.5909 yuan and gained to ¥76.97 from ¥76.29.

New Zealand’s 10-year swap rate rose 1 basis point to 3.12 per cent.

— BusinessDesk