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NZ dollar gains on uneasy markets

NZ Newswire logoNZ Newswire 23/01/2017 Paul McBeth

New Zealand's two-year swap rate fell 4 basis points to 2.37 per cent, and 10-year swaps decreased 3 basis points to 3.43 per cent. © Rex Images New Zealand's two-year swap rate fell 4 basis points to 2.37 per cent, and 10-year swaps decreased 3 basis points to 3.43 per cent.  

The New Zealand dollar rose above 72 US cents as investors remain uneasy about what US President Donald Trump will deliver in his much-anticipated infrastructure spending programme.

The kiwi gained to 72.02 US cents as at 5pm in Wellington from 71.56 cents at 8am and 71.66 cents on Friday in New York. The trade-weighted index was little changed at 78.65 from 78.69 last week.

The greenback has come under pressure as investors second-guess the extent of Trump's promised infrastructure spending, which is seen as adding inflationary pressures to the world's biggest economy.

Trump campaigned on a platform of increased spending, tax reform, and protectionist trade and immigration policies, though detail remains scant since his inauguration on January 20.

"People are going to wait and see what comes out of President Trump's mouth - markets are looking for him to talk about his stimulatory policies, specifically what the spending on infrastructure is going to look like," said HiFX's Michael Johnston.

"The absence of any meaningful data this week means the kiwi will wax and wane with what President Trump comes out with."

Johnston said the Wellington anniversary holiday kept trading relatively light on Monday, though December quarter inflation data on Thursday will be watched to see whether rising oil prices are pushing up consumer prices, which could warrant higher interest rates.

New Zealand's two-year swap rate fell 4 basis points to 2.37 per cent, and 10-year swaps decreased 3 basis points to 3.43 per cent.

The kiwi increased to 95.13 Australian cents from 94.75 cents last week and advanced to 4.9318 Chinese yuan from 4.9217 yuan. It edged up to 67.04 euro cents from 66.88 cents last week and traded at 57.97 British pence from 57.86 pence. The local currency slipped to 81.83 yen from 82.07 yen last week.

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