New Zealand’s Dollar Can’t Catch a Break From Trade or Economy

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(Bloomberg) --

New Zealand’s dollar is August’s weakest Group-of-10 currency as economic data deteriorated and trade-war tensions rattled the globe.

The kiwi slid as much as 0.4% Friday, breaking below the 63 U.S. cent level to the lowest since September 2015. The currency has tumbled about 4% this month, with a half point interest-rate cut from the Reserve Bank of New Zealand adding to losses. Economic data have also weighed -- business confidence numbers Thursday hit an 11-year low with inflation expectations dropping to 1.70%, the least since late 2016.

“Commodity currencies remain under pressure,” said Jason Wong, a senior market strategist at Bank of New Zealand in Wellington. “With the trade war and slower growth, fundamental headwinds remain and we target 0.6150 by year-end.”

New Zealand’s Dollar Can’t Catch a Break From Trade or Economy

Heightened trade tensions between the U.S. and China have roiled global markets this month, and New Zealand is particularly vulnerable. China’s share of the country’s exports climbed to 26% in July, from 23% a year ago.

Investors are expecting more easing from the RBNZ, which could put further pressure on the currency. Traders are now pricing in an 83% chance of another rate cut in November. Westpac predicted the kiwi will be the only G-10 currency to fall over the next week, month and three months in a report Thursday.

“This week’s break below 0.6350 signals a move to the 0.6250 area which was last seen in September 2015,” strategist Imre Speizer wrote.

Still, given the depth of the kiwi’s decline, some sort of recovery would not be unusual, Bank of New Zealand’s Wong said.

“After a near 7% plunge since mid-July, some consolidation is overdue and a gap up on positive news is possible,” he said.

©2019 Bloomberg L.P.

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