Kiwi little changed as risk sentiment improves and commodities slip
The New Zealand dollar was little changed, having fallen to a two-week low overnight, as a measure of risk appetite improved but commodity prices fell, leaving the kiwi struggling against a mixed global backdrop.
The kiwi dollar traded at 68.53 US cents as at 8:30am in Wellington, having touched 68.34 cents overnight, from 68.55 cents late yesterday. The trade-weighted index was at 72.68 from 72.70.
The CRB Index of 19 commonly traded commodities fell 0.2 percent overnight while the the Chicago Board Options Exchange Volatility Index (VIX), known as Wall Street's fear gauge, dropped almost 13 percent. Traders will be watching for a survey of New Zealand manufacturing today for any signs sentiment has shifted in the wake of the change of government and will also be keeping an eye on the progress of US tax reform plans.
"Market sentiment improved overnight as global equities rebounded and yields rose. However, the US dollar and commodities were more mixed," said Philip Borkin, senior economist at ANZ Bank New Zealand, in a note. "Despite a bounce in risk sentiment, the NZD has underperformed, suggesting it could head into the weekend threatening to push lower."
Yesterday, the US House of Representatives approved the package of tax cuts that Reuters described as the biggest tax code overhaul in a generation in a vote that was won 227 to 205, shifting the debate to the Senate. Tax cuts were seen as one of the economy-stimulating policies heralded by US President Donald Trump, although he has struggled to gain policy traction in the Republican-dominated House.
"We suspect support levels will hold, keeping it (the kiwi) range-bound today, although any US tax reform progress will be key to watch," Borkin said.
The kiwi traded at 90.30 Australian cents from 90.24 cents yesterday, when the local currency fell following a drop in the Australian jobless rate. It traded at 51.99 British pence from 52.04 pence and at 58.26 euro cents from 58.20 cents. It was at 4.5424 yuan from 4.5497 yuan and traded at 77.47 yen from 77.45 yen.