The New Zealand dollar rose above 69 US cents for the first time since June as Chinese and US leaders found common ground to deflate trade tensions that threaten to slow the global economy.
The kiwi jumped to 69.16 US cents at 8am in Wellington from 68.78 cents on Friday in New York and 68.65 cents in Asia last week. The trade-weighted index advanced to 75.31 from 75.05 last week.
New Zealand is the first market to open since the G20 leaders’ summit in Buenos Aires over the weekend, where US and Chinese presidents Donald Trump and Xi Jinping agreed to measures cooling their trade dispute.
The US won’t push through increased tariffs from January, China agreed to buy a substantial amount of American products, and both parties will discuss structural changes to intellectual property protection, non-tariff barriers, cyber intrusions, services and agriculture. The stoush has threatened to slow global growth and weighed more heavily on open trading economies such as New Zealand.
“The US-China trade war has been a key driver of markets for much of this year and a de-escalation of tension sets the scene for a broadly-based rally in risk assets,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “We will have to revise our NZD forecasts higher.”
Earlier forecasts had been “based on further tariffs proceeding, with the associated hit to global growth and spillover effects.”
Local data today include third-quarter terms of trade, which is expected to be flat. Australian building consents and Chinese manufacturing figures are also due today.
The kiwi traded at 93.75 Australian cents from 93.68 cents last week and rose to 4.8099 Chinese yuan from 4.8009 yuan. It climbed to 78.69 yen from 78.31 yen last week.
The local currency traded at 54.12 British pence from 54.05 pence last week after another minister resigned from Theresa May’s government over the Brexit deal. The kiwi traded at 60.89 euro cents from 60.98 cents last week.