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Kiwi steady as Trump faces confidence test

NZ Newswire logoNZ Newswire 23/03/2017 Jonathan Underhill

The New Zealand dollar was little changed as financial markets awaited the outcome of a US vote to repeal the Affordable Care Act, known as Obamacare, as a test of whether the Trump administration can enact a policy platform that could stoke the US economy and inflation.

The kiwi traded at US70.29 cents as at 8am on Friday in Wellington, from US70.39c late on Thursday. The trade-weighted index was at 76.28 from 76.33.

Traders view the healthcare reform as a key test of President Donald Trump because it could provide more certainty for other policy initiatives, including a massive spend on infrastructure and tax cuts.

Reuters reported that Trump has struggled to win over sceptical Republicans and there is uncertainty about when a vote would occur in the House.

In New Zealand, merchandise trade figures for February are likely to be the main focus.

"The Trump reflation trade, based on optimism that Trump's spend-up and tax plans will boost the US economy and inflation further, is facing a test today," said ANZ senior economist Sharon Zollner.

"The upcoming vote on the US healthcare bill may well have implications for the USD - amongst other things - and hence the NZD."

New Zealand's trade balance is expected to have turned to a surplus of $180 million last month, from a deficit of $285m, based on economist forecasts. Little market reaction is expected, however, with the kiwi broadly unchanged through Thursday's Reserve Bank announcement, which kept the official cash rate unchanged at 1.75 per cent and signalling rates are on hold for the time being.

On Friday morning, the kiwi dollar fell to 56.14 British pence from 56.40p, having gained on the attack near the British parliament.

It rose to 92.15 Australian cents from A91.91c, fell to 77.88 yen from 78.37 yen and declined to 4.8376 yuan from 4.8482 yuan. It fell to 65.12 euro cents from 65.25c.

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