Kiwi up despite fresh US-China trade jitters

The New Zealand dollar rose despite the reemergence of jitters over a potential USChina trade deal. It was helped by the People’s Bank of China gently lifting the yuan all week and by decreasing expectations of a local interest rate cut next week.

The kiwi was trading at US64.35c at

5.05pm yesterday from US64.10c at 8am while it rose to 4.5304 yuan from 4.5113. The currency has gained the best part of a US cent this week after closing in New York last Friday at US63.49c.

“Part of the reason for the New Zealand dollar being stronger is that the Chinese have set the yuan stronger all week,” says Peter Cavanaugh, the senior client adviser at Bancorp Treasury Services.

The PBOC fixed the yuan at 7.0437 to the US dollar yesterday compared with 7.0749 last Friday.

On Thursday, Westpac said it no longer expects the Reserve Bank to cut its official cash rate on November 13, although it still expects a cut in February.

Cavanaugh says market pricing now rates the chances of a rate cut at 50:50.

US President Donald Trump said he still expects to sign a preliminary trade deal with China, despite Chile cancelling the Apec meeting.

However, Bloomberg has reported that China doubts a long-term deal is possible because of Trump’s unpredictable behaviour.

The New Zealand dollar was at A93.12c from A93.02c, at 49.63 British pence from

49.55, at 57.62 euro cents from 57.49, at 69.50 yen from 69.21 and the trade-weighted index was at 70.84 points from 70.63.

The two-year swap rate eased to a bid price of 1.0095 per cent from 1.0225 per cent late on Thursday. The 10-year swaps fell to

1.3800 per cent from 1.4125.