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NZ dollar under pressure as markets fret about slowdown

Article – BusinessDesk

May 16 (BusinessDesk) – The New Zealand dollar remained range-bound as weak data in both China and the US and continuing trade tensions increase fears of a global slowdown.NZ dollar under pressure as markets fret about global slowdown
By Rebecca Howard

May 16 (BusinessDesk) – The New Zealand dollar remained range-bound as weak data in both China and the US and continuing trade tensions increase fears of a global slowdown.

The kiwi was trading at 65.59 US cents at 7:45am in Wellington from 65.62 at 5pm. The trade-weighted index was at 72.13 points from 72.16.

The kiwi fell after softer-than-expected retail sales and industrial production in China late yesterday added to fears of a slowdown in this country’s main trading partner.

Overnight, US data also pointed to sluggish growth. Retail sales, a measure of purchases at stores, restaurants and online, declined a seasonally adjusted 0.2 percent in April from a month earlier. Factory output also dropped 0.5 percent from the month before, according to Federal Reserve data.

“The uncertainty created by Trump’s tariffs and trade policy have had a negative effect on trade and manufacturing globally which continues to show up in the US data. China’s data may trigger market concerns about the sustainability of China’s recovery in late Q1,” said FX/rates strategist Sandeep Parekh.

Risk appetite, however, got a lift from news US President Donald Trump would hold off on imposing tariffs on imported cars and parts. Treasury Secretary Steven Mnuchin’s remarks that he expects trade talks to resume soon in China also helped.

Looking ahead, today’s jobs data in Australian will be key as the market tries to determine whether the Reserve Bank of Australian might move to cut rates. Yesterday’s softer-than-expected first-quarter lift in Aussie wages has added to the view a rate cut is on the cards.

“A weak print will give more credence to an RBA cut scenario and give the kiwi the upper hand,” said Parekh.

The kiwi was trading at 94.69 Australian cents from 94.70 late yesterday. It was at 4.5088 Chinese yuan from 4.5115.

It was at 51.06 British pence from 50.82 as UK Prime Minister Theresa May looks to hold a fourth vote on the EU withdrawal agreement bill in early June. It was at 58.53 euro cents from 58.54, and at 71.84 Japanese yen from 71.95.

(BusinessDesk)

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