The New Zealand dollar was back below 56 US cents as it starts the week with investors eyeing up inauguration day for US President-elect Donald Trump and any early policy announcements that come out on day one.
Among the first expected are a reprieve for the US operation so social media platform TikTok, which went dark over the weekend after law came into effect requiring it to shed its Chinese ownership or close in the world’s biggest economy.
Trump said he’d make an executive order once he’s back in the Oval Office on Monday in Washington to negotiate a resolution, while CNBC reported Perplexity AI has made an offer to TikTok parent ByteDance to merge with the platform’s US operations, which have started restoring service to its 170 million American users.
TikTok was also a topic of discussion between Trump and Chinese president Xi Jinping over the weekend, with the incoming US president reportedly keen on travelling to China once he takes office.
“News of the Trump-Xi phone call drove down the US dollar by about 0.5% but the fall wasn’t sustained and prior US dollar strength returned, with the DXY index up 0.4% for the day,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Trump’s inauguration as the 47th US President begins tomorrow morning NZ time and, soon after, the market will be on the look out for any early executive orders.”
Surging markets
The kiwi traded at 55.85 US cents at 7am in Auckland from 56.04 cents last week.
Stock markets surged on Friday in Europe and the US ahead of Trump’s inauguration, with Wall Street marking its best week since the November election. US markets are closed on Monday for the Martin Luther King Jr public holiday.
That sentiment will probably carry over to the start of this week, with Australian futures pointing to a 0.3% increase on the S&P/ASX 200 index. Local trading will remain relatively quiet with Wellington closed for its anniversary holiday.
Meanwhile, the December quarter consumers price index is the main domestic data scheduled for this week with a Wednesday release. Economists expect the annual pace of inflation to slow to 2.1%, although the weak currency is seen pushing up prices in the future.
Reporting by Paul McBeth. Image from Solen Feyissa on Unsplash.
