Much like its antipodean counterpart the New Zealand dollar edged higher throughout domestic trade on Thursday before giving up efforts to push back through 0.73 and sinking to intraday lows at 0.7246. With little macroeconomic data on hand to drive direction the Kiwi took its cues from broader risk sentiment plays and expectations surrounding global trade policy. Despite announcements a landmark Asia Pacific Trade deal was reached by 11 participants, including New Zealand, the NZD failed to hold on to upward momentum generated through trade on Wednesday. Thursday’s signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, while a shot in the arm to protectionist trade policy, did little to quell market concerns a global trade ware could derail the broader economic recovery and failed to bolster risk-based trade. The Trade agreement will reduce trade taxes in 11 countries that make up over thirteen percent of the worlds global economy however perhaps of greater significance is the absence of the U.S. Trumps withdrawal from the ten Trans Pacific Partnership was the first signal the current administration would push an Domestic America first platform when negotiating trade.
As we edge closer to an environment of reduced global cooperation in trade commodity currencies like the NZD and emerging markets across Asia will meet increasing downward pressures and we turn our attentions now to revision of Tariff section 232 to determine just what Trumps tariff proclamation means for the broader global economy.