The US dollar came under renewed pressure when the Office of the US Trade Representative revealed plans for a 25 per cent tariff on 1,300 items imported from China, including items that range from malaria diagnostic test kits to new tires for aircraft, straw balers, and combine harvest-threshers. China was quick to respond, vowing to take counter-measures.
"The kiwi dollar is flying today.The market is taking the Trump stuff as anti-US dollar," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. Both the kiwi and the Aussie also got a lift when Australian retail sales rose 0.6 per cent February, led by a rebound in department store sales following several poor months.
The kiwi traded at 94.55 Australian cents from 93.94 cents yesterday and Kelleher said the kiwi may be outperforming the Australian dollar giving ongoing worries about hard commodity prices, in particular, iron ore which has fallen sharply since early March.
For New Zealand, while dairy prices fell in the overnight Global Dairy Trade auction, the slide was led by anhydrous milk fat. Whole milk powder, which makes up the bulk of product on offer, rose 1.6 per cent to US$3,278 ($4,501) a tonne, which likely also helped support the kiwi.
Looking ahead, markets will be keeping on eye on any US-China trade developments and also watching for US jobs data later in the week.
The kiwi dollar rose to 59.33 euro cents from 58.70 cents late yesterday and traded at 77.61 yen from 76.55 yen yesterday. It rose to 4.5832 yuan from 4.5428 yuan and gained to 51.71 British pence from 51.39 pence.
New Zealand's two-year swap rate rose two basis points to 2.24 and the 10-year swap rate rose three basis points to 3.09 per cent.
