Kiwi gains as risk sentiment improves on hopes US, China can avert trade war

The New Zealand dollar rose to its highest level against the greenback in almost two weeks after both the US and China said they would negotiate to head off a trade war sparked by threats of tariff hikes.

The kiwi rose to 72.96 US cents as at 8am in Wellington from 72.73 cents late yesterday and the trade-weighted index was at 74.68 from 74.64 yesterday.

White House trade advisor Peter Navarro said the US is "already at the negotiating table" over trade terms with China while Chinese premier Li Keqiang said the two sides should continue to talk. The comments helped alleviate fears of a trade war since US President Donald Trump revealed plans to impose US$60 billion of tariffs on Chinese goods and separately announced tariffs on steel and aluminium. The kiwi dollar extends its gains against the Australian dollar in the face of weaker prices for iron ore.

"With no major economic data released overnight, headlines around US-China trade tensions remained the dominant market driver," said Nick Smyth, interest rate strategist at Bank of New Zealand, in a note. "Against a backdrop of USD weakness and improved risk sentiment, the NZD has performed strongly."

No domestic economic data is scheduled for today.

The kiwi dollar rose to 94.25 Australian cents from 94.12 cents yesterday. The kiwi traded at 51.28 British pence from 51.33 pence and fell to 58.59 euro cents from 58.77 cents. It fell to 4.5735 yuan from 4.5909 yuan and gained to 76.90 yen from 76.29 yen.

(BusinessDesk)