The New Zealand and Australian dollars rallied overnight after US President Donald Trump made an off-the-cuff comment that a trade deal with China was possible.
The kiwi rose to 57.72 US cents at 7am in Auckland from 57.14 cents yesterday and the Australian dollar advanced to 63.98 US cents from 63.60 cents at 5pm on Thursday with the antipodean currencies gaining support given their nations’ exposure to Chinese trade. The New York Times reported yesterday that US officials are considering whether a deal can be done.
That was against a broadly weaker greenback as traders rallied to the yen after Bank of Japan policy board member Hajime Takata said the central bank should raise interest rates to avoid stoking too much inflation. The kiwi increased to 86.13 yen from 85.96 yen yesterday.
“The NZ dollar has traded at a fresh high for the year just below 57.70 US cents and we see 58 cents as the first test for some resistance,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The knee-jerk fall after the RBNZ’s 50 basis point-rate cut on Wednesday is now a distant memory and the currency is back in the hands of global forces.”
Meanwhile, stock markets on Wall Street were weaker as softer guidance from retailer Walmart sapped investors’ optimism about consumer demand in the world’s biggest economy.
The S&P 500 index fell 0.8% in afternoon trading, while the Dow Jones Industrial Average dropped 1.4% and the Nasdaq Composite declined 0.9%.
Nervous central bankers
Minutes from the US Federal Reserve’s January policy meeting showed the new tariff regime from the White House raised inflationary concerns at the central bank.
Across the Atlantic, stock markets were mixed with Germany’s DAX falling 0.8% as investors weigh up this weekend’s snap election, which analysts predict will deliver a Conservative-led two-party coalition that will introduce more business-friendly policies.
The UK’s FTSE 100 fell 0.6% with bluechip companies such as BP, AstraZeneca and Imperial Brands shedding rights to their dividends, while France’s CAC 40 increased 0.2%.
Corporate earnings season continues in Australasia, with Spark New Zealand, Genesis Energy, Sky Network Television, and NZX among those reporting on this side of the Tasman, while QBE Insurance, Newmont and NextDC among those reporting in Australia.
Local data include the January trade balance.
And Australian media are reporting that US real estate firm CoStar mounted a raid on real estate listings firm Domain Group ahead of a planned A$2.65 billion takeover bid at a 35% premium of A$4.20 a share.
Nine Entertainment has been mulling its controlling stake in the listings group, while in New Zealand, the private equity owner of Trade Me has been said to be considering an initial public offering and NZX-listed media group NZME has seen its OneRoof unit as a growth engine for the firm.
Reporting by Paul McBeth. Image from zhang kaiyv on Unsplash.
