NZ dollar weakens on disappointing domestic trade data

The kiwi was at 67.64 US cents at 5pm. Photo / 123RF

The New Zealand dollar is slightly weaker against the greenback after disappointing domestic trade data and after US President Donald Trump dampened hopes of an early resolution to the US-China trade dispute.

The kiwi was at 67.64 US cents at 5pm from 67.84 US cents at 8am and late yesterday. The trade-weighted index was at 73.96 from 74.10.

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Risk appetite waned after Trump, days before a summit with China's leader, told the Wall Street Journal he expects to move ahead and increase tariffs on $200 billion of Chinese goods to 25 per cent, calling it "highly unlikely" that he would accept Beijing's request to hold off on the move.

Domestically, the kiwi lost some ground after Statistics New Zealand said the October trade deficit was $1.3b. Economists surveyed by Bloomberg had expected a deficit of $850 million. The annual deficit was $5.8b versus an expected $5.1b shortfall. It was the widest annual deficit since the October 2007 year.

"The trade data wasn't too flash. It came on the back of yesterday's surprisingly weak retail sales number. After some very strong numbers, we've had a couple of lukewarm numbers and the market has been taken a wee bit by surprise," said Imre Speizer, Westpac Banking Corp's head of New Zealand strategy.

Looking ahead, investors are waiting for speeches from US Federal Reserve vice chair Richard Clarida later in the global trading day and one from Fed chair Jerome Powell on Wednesday to provide clues about the central bank's 2019 hiking cycle.

If they indicate any caution "that could pull the US dollar back a bit," said Speizer.

He said there will also be interest in tomorrow's Reserve Bank financial stability report where it is widely expected to loosen restrictions on higher-risk mortgage lending.

The kiwi traded at 59.68 euro cents from 59.82 cents yesterday, at 52.80 British pence from 52.94 pence yesterday, and at 76.76 yen from 76.80 yen.

The local currency was at 93.62 Australian cents from 93.66 cents yesterday and decreased to 4.6974 Chinese yuan from 4.7119 yuan.

New Zealand's two-year swap rate fell 2 basis points to 2.09 per cent; the 10-year swaps were down 1 basis point at 2.93 per cent.