Dollar holds gains as fears over global politics keeps investors nervous

The New Zealand dollar stuck to a tight range in local trading as uncertainty over the global outlook kept investors on the sidelines.

The kiwi was at 69.53 US cents as at 5 pm in Wellington versus 69.55 cents as at 8:30am in Wellington and 69.36 cents late yesterday. The trade-weighted index rose to 75.94 from 75.84 late yesterday.

Stocks across Asia were mixed as investors vacillated between riskier assets and safe havens, largely ignoring a speech by US Federal Reserve chair Janet Yellen who said the US economy is doing well but reiterated any rate hikes will be gradual. However, OMF private client adviser Stuart Ive said the greenback eased after Yellen said any fiscal stimulus or tax cuts implemented by US President Donald Trump won't really have an impact this year but would next year.

Overall, the kiwi could lose some ground ahead of several holiday-shortened weeks for Easter and Anzac Day, Ive said, noting that possible US military action against North Korea "poses a potential flash point over the coming weeks."

Still, the fact that milk futures continue to climb, with whole milk powder futures up 15 percent in recent weeks as bad weather calls into question production levels, will continue to support the kiwi, Ive said.

The New Zealand dollar was trading at 92.69 Australian cents as at 5pm from 92.62 cents late yesterday, and holding its ground despite news Australian business conditions surged to their highest levels since the global financial crisis almost a decade ago in March. Ive said Thursday's employment data and the RBA financial stability report will be more keenly watched for Aussie dollar direction, in particular against the kiwi.

The kiwi slipped to 76.91 yen from 77.30 yen late yesterday, with the yen benefiting from a safe haven bid. It traded at 65.64 euro cents from 65.52 cents and was little changed at 55.96 British pence from 56 pence. The kiwi traded at 4.7992 yuan from 4.7885 yuan.

New Zealand's two-year swap rate fell 3 basis points to 2.24 while 10-year swaps fell 4 basis points to 3.28 percent.

(BusinessDesk)