NZ dollar sticking to tight range but may see more upside
The New Zealand dollar stuck to a tight range today but may see more upside as markets continue to flounder after US President Donald Trump's failure to enact healthcare reform.
The kiwi traded at 70.40 US cents as at 5 pm in Wellington versus 70.43 US cents as at 8am and 70.45 cents late yesterday. The trade-weighted index was little changed at 76.21 from 76.26.
The greenback had gained significantly over recent months on the US President's planned stimulus policies. However, when Trump failed to garner enough support to repeal the Affordable Care Act, it brought into question whether he will be able to bring in tax cuts and infrastructure spending.
"Markets are waiting for the next big thing, and can't seem to find it at the moment. We are all waiting to see if he can get his tax package through and go from there," said Ross Weston, FX trader at Kiwibank. Given the lack of clarity, it feels like the kiwi dollar "still has some upside to it as opposed to downside, as the whole thing gets unwound, or at least partially unwound," he said.
Weston said the kiwi dollar is also being supported by the better-than-expected dairy auction last week.
The local currency continued to benefit from positive China sentiment after a series of agreements were inked by Prime Minister Bill English and Premier Li Keqiang and traded at 4.8451 yuan from 4.8407 yuan late yesterday
The kiwi dollar traded at 56.02 British pence from 56.23 pence and was little changed at 92.39 Australian cents from 92.34 cents. It rose to 77.86 yen from 77.73 yen and traded at 64.80 euro cents from 64.94 cents.
The two-year swap rate rose 2 basis points to 2.3 percent while 10-year swaps rose 3 basis points to 3.4 percent.