NZ dollar heading for weekly gain

The kiwi dollar is headed for a 1.5 per cent weekly gain after soothing comments from the Federal Reserve and signs of progress in US-China trade talks reduced fears of sharply slowing global growth.

The kiwi was trading at US68.06c at 5pm, from US67.87c cents on Thursday and US67.02c this time a week ago. The tradeweighted index was at 73.46 from 73.29.

BNZ, which is picking the kiwi dollar to end 2019 at 70 US cents, said slower global growth this year is to be expected, but that is a long way from the deep downturn some investors had been picking late last year.

“If anything, pricing so far for 2019 suggests that risk assets might have overshot to the downside late last year, pricing in too much pessimism about the economic outlook,” senior markets strategist Jason Wong said in an outlook paper yesterday.

“The new year has begun with higher global equity markets, higher global rates, higher commodity prices and stronger emerging market and commodity currencies.”

Equity markets, and the kiwi, gained this week after Federal Reserve chair Jerome Powell last Friday affirmed his confidence in the US economy but signalled the central bank would take a more patient view on further rate rises this year.

The New Zealand dollar was trading at 94.45 Australian cents from 94.41 cents on Thursday.

It was at 73.70 yen from 73.17 yen, at 53.33 British pence from 53.03 pence, at 59.05 euro cents from 58.65 cents, and at 4.5954 Chinese yuan from 4.6052 yuan.

The New Zealand two-year swap rate ended the session at 1.9233 from 1.9139 on Thursday, the 10-year rate rose to 2.6225 from 2.6100.