The New Zealand dollar held above 67 US cents as investors grew optimistic the US and China will find common ground in addressing their trade dispute, allaying a major threat to global growth.
The kiwi traded at 67.01 US cents at 8am in Wellington from 67.12 cents on Friday in New York and 67.06 cents in Asia last week. The trade-weighted index was at 73.26 from 73.37 last week.
Traders are heading into the final day of the year on an upbeat note after US President Donald Trump said he had a “long and very good call” with his Chinese counterpart Xi Jinping ahead of next week’s trade talks. That was confirmed by Chinese foreign ministry spokesman Lu Kang, who said the nations’ ties are at a “historic new starting point.” Tensions between the world’s two biggest economies have stoked investors’ fears that an all-out trade war would crimp global growth.
“With both sides in the US and China talking up progress in the trade talks, that has to be positive news,” said Stuart Ive, a foreign exchange dealer at OMF. “The kiwi may move higher against the US dollar given it’s some positive news, and there’s been a scarcity of positive news.”
Ive said the kiwi may come under pressure against the Australian dollar, which has been sold off aggressively over the heightened trade tensions because of its exposure to China’s economy. The kiwi traded at 94.93 Australian cents from 95.07 cents last week, and declined to 4.6073 Chinese yuan from 4.6148 yuan.
The trade news came out on the weekend after trading on Wall Street closed, meaning stock markets won’t have reacted to the China-US trade talks optimism yet. Stocks on Wall Street were very turbulent last week during the holiday-shortened period, robbing Trump of the ‘Santa Rally’ seen consistently since the 1940s over the Christmas-New Year period.
The kiwi traded at 58.53 euro cents from 58.65 cents on Friday and decreased to 52.76 British pence from 52.91 pence. It traded at 73.96 yen from 74.01 yen last week.