Dollar falls after Trump's tax talk lifts greenback
The kiwi is "too expensive to short" - David Croy
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The New Zealand dollar fell to its lowest level since January 23 after US President Donald Trump hinted at tax cuts within weeks and Reserve Bank governor Graeme Wheeler said interest rates wouldn't rise any time soon.
The New Zealand dollar fell as low as 71.72USc and traded at 71.84USc as at 8am in Wellington from 71.96USc late yesterday. The trade-weighted index was little changed at 78.32.
President Trump told airline executives that he would be announcing "something phenomenal in terms of tax" in the next few weeks, comments that helped lift the greenback, pushed up US bond yields and helped lift the Standard & Poor's 500 Index to a record high.
That weighed on the kiwi, which was sold off yesterday after the RBNZ's monetary policy statement adopted a neutral tone and projected the official cash rate to rise just 25 basis points by 2020, dashing some market speculation the central bank could hike as soon as this year.
President Trump's comments "saw the 'Trump trade' resume," ANZ Bank senior rates strategist David Croy says.
"The kiwi continues to languish in the wake of yesterday's neutral RBNZ MPS. Fair enough too, with the governor warning that the rates market had gotten a bit too far ahead of itself pricing in so much tightening."
Still, Mr Croy says the kiwi is "too expensive to short" and "comes with a decent economic/political story."
No local economic figures are scheduled for release today although attention will shift to the Reserve Bank of Australia's monetary policy statement. RBA governor Philip Lowe is relatively upbeat about the Australian economy and was equivocal on the strength of the Australian dollar.
The kiwi fell to 94.14Ac from 94.40Ac late yesterday. It traded at 57.44 British pence from 57.49 pence and was at 67.39€c from 67.31€c. The kiwi rose to 81.33 yen from 80.68 yen and fell to 4.9305 yuan from 4.9423 yuan.
(BusinessDesk)
Jonathan Underhill
Fri, 10 Feb 2017
Fri, 10 Feb 2017
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
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Dollar falls after Trump's tax talk lifts greenback
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