Dollar jumps as US-China trade war fears ease

The New Zealand dollar surged a US cent as worries receded that US President Donald Trump was about to reignite trade wars with China and as more countries reopened their economies after Covid-19 lockdowns.

The kiwi was trading at US61.18c at 5pm yesterday from US60.15c at the same time on Thursday and looks like ending the week well above last Friday’s close in New York at U60.64c. The trade-weighted index was at

68.99 from 68.24 on Thursday. Chinese news agency Xinhua has reported that top trade negotiators from the US and China have talked by phone and agreed to implement the trade deal agreed last year.

That lulled fears raised by Trump threatening to punish China with tariffs for letting the virus escape China.

New Zealand’s Government slightly eased restrictions two weeks ago to allow the construction industry and takeaway food operators to restart work and it will announce next week whether restrictions can be loosened further.

The market is also looking ahead to the Reserve Bank of New Zealand’s latest monetary policy statement and is expecting its quantitative easing to double to $60 billion, said Mark Johnson, a private client adviser at OMF. QE, or the Reserve Bank buying bonds and other securities from banks, is the technical name for money printing.

The New Zealand dollar was trading at A93.65c from A93.75c at 5pm on Thursday. It was at 49.39 British pence from 48.82 pence, at 56.41 euro cents from 55.71 cents, at 65.10 yen from 63.90 yen and at 4.3279 Chinese yuan from 4.2687 yuan.

The bid price on the two-year swap rate closed at 0.1600 per cent from 0.1450 per cent on Thursday and 10-year swaps were at

0.7025 per cent from 0.7600 per cent.