Global growth worries peg back kiwi

The New Zealand dollar is headed for a 1 per cent fall against the greenback this week as worries about global growth cast a pall over markets.

The kiwi traded at US68.06c at 5pm yesterday versus US68.11c at 8am. It was at US68.76c last Friday in New York. The tradeweighted index was at 74.25 from 74.34 on Thursday.

Markets have been increasingly concerned that the ongoing trade dispute between China and the US will have an impact on global growth, which has weighed on risk appetite. The focus is now on the G20 meeting in Argentina next week as President Donald Trump and China’s President Xi Jinping prepare to meet, said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

Kelleher said that although markets are jittery, sentiment has improved slightly after Trump on Thursday said he hoped he can make a deal when he meets Xi. That is helping keep the kiwi supported and if it holds about US67.50c, it could grind higher, he said.

He also noted that although the US Federal Reserve is widely expected to hike rates in December, investors are now pulling back on expectations for next year as they fret about a possible US slowdown. That is also New Zealand-dollar-positive, he said.

A draft deal between Britain and the European Union on future relations has also helped sentiment although there are still hurdles to get through, including the deeply divided British parliament. The pound, however, gained on the news and the kiwi traded at 52.84 British pence from 53.28 pence on Thursday. The kiwi traded at A93.81c from A93.92c on Thursday and was at 59.62 euro cents from €59.76c.

New Zealand’s two-year swap rate fell 1 basis point to 2.12 per cent.