NZ dollar steady vs greenback as Trump, Xi prepare to meet

The New Zealand dollar was little changed against the greenback and fell against the yen as investors' risk appetite dwindled ahead of the summit between US president Donald Trump and his Chinese counterpart, Xi Jinping.

The kiwi traded at 69.72 US cents as at 5pm in Wellington, little changed from late yesterday. It fell as low as 69.36 cents overnight after a stronger than expected US jobs survey. The local currency traded at 77.04 yen, having fallen as low as 76.83 yen during the day, a five-month low, from 77.10 yen yesterday.

With little in the way of domestic economic news, the Trump-Xi meeting at Trump's Mar-a-Lago estate in Florida on Thursday is looming as the next risk event for financial markets.

Assuming that passes without any outbursts from Trump, traders will then focus on US non-farm payrolls for March, with economists expecting the world's biggest economy added about 180,000 jobs last month, down from 235,000 in February, while the jobless rate held at 4.7 percent. There is speculation payrolls may be stronger after the ADP survey of US private employment showed an increase of 263,000 jobs in March, the highest since December 2014 and ahead of estimates of 187,000.

"The summit may have greater ramifications than payrolls," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. "Will Trump be presidential or go for a win, given he hasn't had many of those lately."

Xi and his wife, Peng Liyuan, will join Trump and wife Melania for dinner on Thursday night ahead of a series of meetings between the leaders on Friday, Reuters reported. Trump has previously railed against China, saying Beijing controls the level of the yuan for the benefit of its exporters and "steals" American jobs.

Both the kiwi and Australian dollar fell against the yen today in the face of what appeared to be Japanese selling, Kelleher said. Given the ADP jobs survey, the market is expecting payrolls to be above 200,000, he added.

The trade-weighted index was at 75.98 from 75.86 yesterday.

The kiwi fell against the greenback following the ADP jobs figures before climbing again after the release of the minutes of the Federal Reserve's last policy meeting, which showed policymakers believe the Fed should start reducing its US$4.5 trillion balance sheet this year, a move that would amount to tightening monetary policy.

The local currency rose to 92.48 Australian cents from 92.07 cents late yesterday. It rose to 4.8073 yuan from 4.7971 yuan. It was little changed at 65.28 euro cents from 65.27 cents and slipped to 55.82 British pence from 55.98 pence.

New Zealand's two-year swap rate fell 2 basis points to 2.24 percent, and 10-year swaps declined 2 basis point to 3.30 percent.

(BusinessDesk)