China-US trade war hits NZ dollar

Trump's trade war is hitting the local market. Photo/Getty Images.

The New Zealand dollar continued to be weighed on by escalating global trade tensions, with China now saying it will raise tariffs on some US goods from June 1.

The kiwi was trading at 65.71 US cents at 8am in Wellington from 65.76 US cents late yesterday. The trade-weighted index was at 72.19 from 72.13.

Market jitters were stoked when China announced it would impose higher tariffs on a range of US goods in the wake of Washington's decision last week to hike tariffs on US$200 billion of Chinese imports. Additional US tariffs on all remaining Chinese imports, which would affect an additional US$300 billion worth of goods, have not been decided on yet.

Late in the session, President Donald Trump indicated he would speak with his Chinese counterpart Xi Jinping during the G-20 summit. Treasury Secretary Steven Mnuchin said that US-China trade talks are still ongoing, which helped to relieve some pressure.

"News of a Trump-Xi meeting provides a glimmer of hope, but safe-haven assets remain favoured by markets at present," said ANZ Bank FX/rates strategist Sandeep Parekh.

"Financial markets are pricing in easier monetary policy from central banks as global trade risks and risk aversion rise," he said. "The kiwi will continue to struggle in the current environment."

The kiwi was trading at 4.5185 Chinese yuan from 4.5101 yesterday, at 94.60 Australian dollars from 94.25, at 50.70 British pence from 50.57, at 58.50 euro cents from 58.58, and at 72.83 Japanese yen from 72.20.

- BusinessDesk