Kiwi dollar heading for weekly decline

The New Zealand dollar is headed for a 0.7 per cent weekly fall after losing ground when jitters around global trade roiled markets, but it managed to claw back above US69c in Asian trading yesterday.

The kiwi traded at US69.01c at 5pm versus US68.78c at 8am and US68.37c late on Thursday. It traded at US69.48c a week ago. The trade-weighted index rose to 73.33 from

72.83 on Thursday.

While the kiwi fell against the greenback this week when China responded to US tariffs by imposing its own trade levies on US$34 billion of US goods and both nations stepped up their sabre-rattling, it clawed back some of those losses overnight on Thursday when US data was weaker than expected and continued to push slightly higher in Asian trading. The Philadelphia Federal Reserve’s gauge of US Mid-Atlantic business activity fell to an 18-month low of

19.9 versus expectations of a 29 reading. Martin Rudings, senior dealer foreign exchange at OMF, said the Thursday night moves “put a question mark around the short-term direction” for the kiwi, which had been viewed as negative. “The [US] dollar has been reasonably strong of late, so there is plenty of room for it to pull back,” he said. He also noted that some of the fears around global trade had abated, which was helping risk appetite.

While the kiwi may rebound further, Rudings said the central bank’s rate review next Thursday will be weighing on investors’ minds. All 14 economists polled by Bloomberg expect the official cash rate to remain at a record low 1.75 per cent. The kiwi traded at A93.27c from A92.84c. It was at 52 British pence from 51.97 pence on Thursday and 4.4856 yuan from 4.4375 yuan and at

75.88 yen from 75.63 yen. It rose to 59.39 euro cents from 59.12 cents. New Zealand’s two-year swap rate fell 1 basis point to 2.24 per cent and 10-year swaps fell 3 basis point to 3.11 per cent.