Global tension and local data hurt NZ dollar

The New Zealand dollar weakened and is headed for a weekly loss of more than US1c amid ominous developments in the Gulf of Oman and as the escalation of Chinese antidumping duties on some steel products made traders more risk-averse.

Weak domestic manufacturing data didn’t help the outlook for the local economy either.

The kiwi was trading at US65.34c at 5pm in Wellington from US65.65c at 8am and US66.64c last Friday in New York. The tradeweighted index fell to 71.89 points from 73 in New York last Friday.

“It’s a combination of global nervousness and risk-off with the tanker incidents in the Gulf of Oman,” says Peter Cavanaugh, the senior client advisor at Bancorp Treasury Services.

“In the current environment, financial markets and currencies are vulnerable to bad news.”

US Secretary of State Mike Pompeo has blamed Iran for the attacks while Iran says it “categorically” denies that accusation.

Locally, the BNZ-Business NZ Performance of Manufacturing Index fell 2.5 points to a seasonally adjusted 50.2 points in May, barely positive and at its slowest pace in more than six years – anything lower than 50 points means activity is contracting.

The main focus globally next week is likely to be the US Federal Reserve policy meeting and rate decision while New Zealand GDP data for the March quarter is due on Thursday.

The kiwi was trading at A94.67c from A94.97, at 51.53 British pence from 51.78p, at 57.94 euro cents from €58.23c, at 70.77 yen from ¥71.13, and at 4.5224 Chinese yuan from 4.5438.