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Kiwi little changed ahead of Trump speech

NZ Newswire logoNZ Newswire 28/02/2017 Jonathan Underhill

© Rex Images The New Zealand dollar was little changed ahead of a speech by US President Donald Trump that some traders expect will set out his spending plans and the magnitude of his policies while there's little domestic news likely to move the kiwi.

The local currency traded at US71.82 cents as at 5pm on Tuesday in Wellington from 71.94c on Monday.

US Treasury Secretary Steven Mnuchin said last weekend that Mr Trump will use a speech on Tuesday in the US to outline tax cuts for companies and the middle class, a move that would be seen as a boost to the US economy.

Reuters reported, citing a White House official, that Mr Trump will seek a US$54 billion increase in military spending, and there are expectations he will flag infrastructure spending as well.

"If it disappoints the market the kiwi goes up. If he gives the market what it wants, the US dollar gains," said Imre Speizer, senior market strategist at Westpac.

Economists will be hoping Mr Trump will give the rough magnitude of his plans, allowing them to calculate the implications for US inflation and economic growth, he said. "Right now no-one knows but the market is slightly optimistic in its expectations."

The kiwi didn't move much after figures showed the trade deficit widened to $283 million in January as crude oil drove imports to a record.

In other economic news, New Zealand business confidence slipped in February while remaining relatively optimistic, as the country's pace of economic growth starts hitting a "mature stage" where it becomes harder to keep hitting new highs.

The kiwi traded at 57.78 British pence from 57.89 pence on Monday. It traded at A93.47c from 93.55c and slipped to 67.84 euro cents from 68.10 cents. The kiwi rose to 80.90 yen from 80.71 yen and fell to 4.9341 yuan from 4.9468 yuan.

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