NZ dollar steady as Trump, Kim pledge to keep momentum

Article – BusinessDesk

NZ dollar steady as Trump, Kim pledge to keep momentum after summit; focus shifts to central banks By Rebecca HowardNZ dollar steady as Trump, Kim pledge to keep momentum after summit; focus shifts to central banks

By Rebecca Howard

June 12 (BusinessDesk) – The New Zealand dollar was nearly unchanged as US President Donald Trump and North Korea’s Kim Jong Un pledged to maintain their momentum after a historic meeting between the leaders to end a nuclear stand-off in east Asia.

The kiwi dollar traded at 70.37 US cents as at 5pm in Wellington from 70.22 cents at 8am and 70.36 cents late yesterday. The trade-weighted index was at 73.72 from 73.68.

Tuesday’s North Korea summit between Trump and Kim came hot on the heels of a disappointing G7 leaders summit, where the world’s biggest economies weren’t able to find common ground on divergent trade policies. That put the denuclearisation summit firmly in focus for investors, who have been increasingly nervous over heightened geopolitical tensions.

Ross Weston, a senior trader at Kiwibank, said the kiwi dollar initially dipped on a stronger greenback when the summit got underway but pared those losses to end broadly unchanged from late yesterday. “The moves really aren’t that big” and markets are cautious as “no one wants to have a whole lot riding on a summit with two such large personalities,” he said.

The North Korean summit in Singapore will be followed by policy meetings of the US Federal Reserve, which is expected to raise rates, and the European Central Bank, which may offer more detail about when it might start unwinding its massive bond-purchasing programme. The Bank of Japan will also review policy this week.

Weston said the focus has now shifted to the Fed and its so-called ‘dot plot’ that indicates the future rate track. While markets are waiting to see if the Fed moves to include another rate increase this year, Weston said he expects them to push out any extra rate increases to 2019.

He said that investors are also waiting for more local economic data, such as next week’s release of first-quarter gross domestic product. Today’s data pointed to a slightly softer picture, he said. Seasonally adjusted total retail spending on credit and debit cards rose a modest 0.4 percent in May following a substantial 2.2 percent fall in April.

The kiwi dollar rose to 52.68 British pence from 52.45 late yesterday and gained to 59.81 euro cents from 59.63 cents late yesterday.

The kiwi was at 77.22 yen from 77.23 yen and at 92.39 Australian cents from 92.52 cents. It traded at 4.5079 yuan from 4.5070 yuan.

New Zealand’s two-year swap rate fell 1 basis point to 2.22 percent and 10-year swaps eased 1 basis point to 3.19 percent.

(BusinessDesk)

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