The kiwi rose to 69.26 US cents as at 8am in Wellington from 69.10 cents on Friday in New York and 68.84 cents in Asia last week. The trade-weighted index increased to 72.68 from 72.58.
US Treasury Secretary Steve Mnuchin said the trade war is on hold and the US won’t impose harsh tariffs on China while negotiations are ongoing after receiving commitments from Asia’s biggest economy for meaningful increases to agricultural and energy imports.
The measures aim to reduce the US’s US$200 billion trade deficit with China, a key goal for President Donald Trump. The threat of a trade war has weighed on trade-based economies such as NZ and Australia.
“It seems for now that common sense is prevailing and the risk of a major trade war has subsided,” Bank of NZ senior markets strategist Jason Wong said in a note.
“Currency markets were quiet but a notable outperformance of the NZD prevailed.”
Wong said the kiwi looked oversold below 69 US cents after a big positioning shake-out and speculative positions on the currency are close to square. Global events will continue to drive the local currency, which has been under pressure as building inflationary pressures have pushed up the yield on US 10-year Treasuries.
Local data today includes first-quarter retail sales, which are expected to show upbeat consumer spending, and April travel and migration figures.
The kiwi rose to 92.04 Australian cents from 91.72 cents on Friday in New York and gained to 4.4121 Chinese yuan from 4.4025 yuan. It gained to 76.71 yen from 76.52 yen last week and traded at 58.76 euro cents from 58.69 cents. The kiwi increased to 51.34 British pence from 51.24 pence last week. – BusinessDesk
