NZ dollar eases as investors brace for tariffs deadline

The kiwi was trading at 65.49 US cents at 5pm. Photo / 123RF

The New Zealand dollar was a little weaker as investors braced themselves for major events including Britain's general election and the Dec. 15 deadline for more US tariffs on Chinese imports unless the two nations reach some kind of ceasefire agreement.

The kiwi was trading at 65.49 US cents at 5pm in Wellington from 65.58 cents at 8am while the trade-weighted index was at 72.39 points from 72.49.

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"The market's adjusted to all the excitement on Friday in the US with their absolutely stunning labour market data," said Peter Cavanaugh, the senior adviser at Bancorp Treasury Services.

The non-farm payrolls data showed the US economy added 266,000 jobs in November, well above economists' forecasts for about 187,000, and the US unemployment rate returned to 3.5 per cent, the same as a few months ago and the lowest since 1969, from 3.6 per cent in October.

The domestic market didn't react to data showing stronger-then-expected manufacturing data which suggested the economy may have grown faster in the September quarter than the Reserve Bank's 0.3 per cent forecast.

ASB economist Jane Turner upgraded her September-quarter GDP forecast from 0.5 per cent to 0.7 per cent.

But Cavanaugh said that data "didn't add anything new to the story," merely confirming the impact of last week's near-record terms of trade data.

The market is now looking to the outcome of the Federal Reserve's latest monetary policy meeting, which will be announced at 7am New Zealand time on Thursday and Christine Lagarde's first meeting as chair of the European Central Bank.

As well, polling booths in Britain close at 11am, New Zealand time on Friday, with Prime Minister Boris Johnson's Conservative Party the most likely winner.

But the biggest question mark of all is whether the US will allow the Dec. 15 deadline to come and go for more tariffs to kick in on all the Chinese products it hasn't already imposed tariffs on.

"It's one of those situations where if nothing is done, something will happen – the tariffs will come into effect," Cavanaugh said.

"China has made it very clear that those tariffs are a sticking point for them" and has also been demanding a reduction in existing tariffs, he said.

Data released at the weekend showed China's exports in November shrank for a fourth consecutive month and its trade surplus with the US for November stood at US$24.6 billion ($37.5b), according to Reuters, easing from US$26.45b in October.

The New Zealand dollar was at 95.89 Australian cents from 95.86 cents this morning. It was at 59.25 euro cents from 59.33, at 49.83 British pence from 50.00, at 71.10 yen from 71.24 yen and at 4.6072 Chinese yuan from 4.6148.

The two-year swap rate climbed to a bid price of 1.2269 per cent from 1.2242 pm on Friday while 10-year swaps rose to 1.6950 per cent from 1.6550 per cent.