US President Donald Trump signed a presidential memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China and China announced plans for reciprocal tariffs on 128 U.S. products that include pork, wine, fruit and steel, according to CNBC, citing a statement from China's commerce ministry.
"The [US] dollar is back in trouble again, given the tensions that could arise from these tariffs. Just how widespread they are going to be is anyone's guess at the moment," said Mark Johnson, a senior dealer at OMF.
The potential consequences are creating increased volatility in markets.
"Equity markets went into a bit of freefall today and I don't know that we are out of the woods yet," he said.
Looking ahead, investors will be keen to see the new Policy Targets Agreement that Finance Minister Grant Robertson and Reserve Bank Governor-designate Adrian Orr will sign Monday as well as the results of the first phase of the review of the Reserve Bank Act 1989.
Among other things, the review includes an overview of the new decision-making structure at the bank.
The new PTA is expected to change the central bank's long-held exclusive focus on inflation targeting to include an employment objective.
Orr takes over as governor of the central bank on Tuesday and is scheduled to give a media briefing with Robertson on Monday.
The kiwi dollar rose to 51.14 British pence from 51.08 pence and traded at 58.52 euro cents from 58.51 cents and rose to 4.5719 yuan from 4.5460 yuan. It traded at 75.64 yen from 76.45 yen late yesterday, as the yen benefited strongly from the flight to safe haven given the trade war jitters.
The kiwi rose to 93.61 Australian cents from 93.40 cents yesterday.
New Zealand's two-year swap rate eased 1 basis point to 2.22 per cent and the 10-year swap rate fell 4 basis points to 3.10 per cent.
