Kiwi under US73c and set to slip further

The New Zealand dollar is headed for a 0.5 per cent weekly decline against the greenback on rising risk aversion as markets fret about a possible trade war and more changes in White House staff.

The kiwi dollar traded at US72.44c as at

5pm from US72.69c at 8am and from US73.20c late Thursday. It traded at US72.80c last Friday in New York. The trade-weighted index fell to

74.42 from 74.95 late Thursday.

ASB Bank said the greenback came under pressure in Asian trading as investors sought the safe-haven yen on jitters about the potential global trade war and as equity markets slipped.

The kiwi fell to 76.69 yen from 77.68 yen. Investors were also nervous after the

reported President Donald Trump had decided to fire National Security Adviser H.R. McMaster, the latest in a raft of changes.

Looking ahead, the kiwi is likely to lose further ground next week as economists see no prospect of acting Reserve Bank governor Grant Spencer lifting the official cash rate in his final review on Thursday and do not expect him to deviate from the line that rates are on hold for the foreseeable future given the lack of inflation.

All 13 economists polled by Bloomberg expect the OCR to stay at a record low 1.75 per cent next Thursday.

The US Federal Reserve, on the other hand, is widely expected to lift rates next week by a quarter-point, which will further lessen the kiwi’s allure.

The kiwi gained to A93.12c from A93.01c. It fell to 58.85 euro cents from €59.20c and to 52.00 British pence from 52.39 pence.

The local currency declined to 4.5840 yuan from 4.6237 yuan.

New Zealand’s two-year swap rate fell 1 basis point to 2.26 per cent and the 10-year swap rate fell 1 basis points to 3.18 per cent.