The New Zealand dollar fell from a spike during the Labour Day holiday as Chinese policymakers pledged to support a slowing economy.
The kiwi declined to 65.50 US cents as at 8am in Wellington from 65.92 cents yesterday. It closed last week at 65.61 cents. The trade-weighted index was almost unchanged at 71.89 from 71.88 last week.
The People’s Bank of China yesterday offered more support for private firms, including ways to help them tap capital markets for funding. That was part of a wider response by Chinese policymakers to the nation’s 6.5 percent annual growth rate in the September quarter – the slowest since the global financial crisis. Over the weekend, President Xi Jinping promised to support the private sector and cut personal income taxes to counter the slowing growth and escalating trade war with the US. New Zealand counts China as its biggest trading partner.
“The NZD had run up through US$0.66 over the weekend, supported by a more positive vibe around China,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “It has been downhill since then, with a broadly based USD dynamic currently in force.”
The US dollar has been the beneficiary of rising US bond yields as the Federal Reserve remains on track to keep raising interest rates. The yield on US 10-year Treasuries is 52 basis points higher than that of its New Zealand equivalent.
No local data is scheduled for today.
The kiwi fell to 50.49 British pence from 50.73 pence yesterday and dropped to 57.13 euro cents from 57.63 cents. UK Prime Minister Theresa May’s leadership is under pressure again after Brexit negotiations stalled last week. Fears over Italy’s planned budget deficit are also keeping investors uncertain over the stability of the European Union.
The local currency declined to 92.45 Australian cents from 93.23 cents yesterday and fell to 73.90 yen from 74.65 yen. It dropped to 4.5494 Chinese yuan from 4.5961 yuan yesterday.