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NZ dollar pushes higher on uncertainty

NZ Newswire logoNZ Newswire 24/01/2017 Rebecca Howard
US President Donald Trump © Associated Press US President Donald Trump

The New Zealand dollar continued to push higher on US dollar profit taking in the wake of US President Donald Trump's latest comments on trade and the border tax.

The kiwi gained to 72.44 US cents as at 5pm in Wellington from 72.12 cents at 8am and 72.02 cents late Monday in Wellington. The trade-weighted index was at 78.96 from 78.65.

"It's all about the US dollar. The market just got a little ahead of itself and now we are seeing some profit taking," said ASB's Tim Kelleher.

The greenback gained strongly after Trump's election on a possible increase in infrastructure spending but has pulled back on ongoing uncertainty given that details remain thin.

Kelleher said he expects the kiwi to continue to push higher against the US dollar.

News that Trump formally ordered the US to withdraw from the Trans-Pacific Partnership trade deal was largely expected but investors are watching to see just how far the protectionist policies go, Kelleher said.

HSBC Australia and New Zealand chief economist Paul Bloxham said he expects the greenback to gain over the long term as the Trump administration will be positive for US growth. He underscored, however, there is still "considerable uncertainty" around what Trump will deliver.

Kelleher said with little data, either at home or abroad, to push it around, the kiwi will remain at the mercy of US dollar moves.

The kiwi increased to 95.50 Australian cents from 95.13 cents Monday and advanced to 4.9622 Chinese yuan from 4.9318 yuan. It rose to 67.29 euro cents from 67.04 cents Monday. In the other direction, it eased slightly against the British pound to 57.83 British pence from 57.97 pence. The local currency slipped to 81.60 yen from 81.83 yen.

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