MARKET CLOSE: NZ shares fall on nuclear fears, F&P Healthcare and Sky TV drop while Hallensteins rallies
The New Zealand dollar is heading toward a 3 percent weekly fall against the greenback as rising geopolitical tensions continued to crimp risk appetite and weak domestic data continues to weigh.
The kiwi traded at 72.73 US cents as at 5pm from 72.80 US cents as at 8:30am in Wellington from 73.09 cents late yesterday. It was at 74.98 cents in New York last Friday. The kiwi was trading at 79.23 yen from 80.44 yen, as the safe-haven yen continued to attract interest as US President Donald Trump stepped up his rhetoric against North Korea.
Trump warned North Korea again not to strike Guam or US allies, saying his earlier threat to unleash "fire and fury" on Pyongyang if it launched an attack may not have been tough enough, Reuters reported
Shortly after Trump spoke, US Defense Secretary James Mattis told reporters in Mountain View, California, a diplomatic approach to the North Korean threat was still preferred and a war would be "catastrophic." However, when asked if the US was ready if North Korea took a hostile act, he said: "We are ready."
Ross Weston, a senior trader at Kiwibank, said weak food price data and news that manufacturing activity continued to expand in July but dipped slightly compared with June added to the kiwi's weakness, in particular after the Reserve Bank continued to signal rates would be on hold until September 2019.
On Thursday, the central bank kept rates at 1.75 percent and said headline inflation is likely to decline in coming quarters as the effects of higher fuel and food prices dissipate and the outlook for tradeables inflation remains weak. As a result "monetary policy will remain accommodative for a considerable period," it said.
Looking ahead, Weston said markets are waiting for US consumer price inflation data later in the global trading day, expected to have picked up to 0.2 percent from zero the previous month.
However, "any data is really a side show" to the geopolitical tensions. "That is the main focus," he said.
The trade-weighted index fell to 76.72 from 77.11 yesterday. The kiwi dropped to 4.8490 yuan from 4.8758 yuan, declined to 61.75 euro cents from 62.28 cents and decreased to 55.98 British pence from 56.26 pence. The kiwi was at 92.64 Australian cents from 92.77 cents.
.New Zealand's two-year swap rate fell 4 basis points to 2.14 percent while 10-year swaps fell 7 basis points to 3.11 percent.