Risk-off sentiment prevailed in overnight markets, pushing the USD and JPY higher against a number of currencies. Against this backdrop, the New Zealand Dollar remained fairly resilient, sliding only marginally downwards. Opening this morning at 0.6538 the Kiwi was mostly spared of following the Chinese Yuan lower and remains well supported moving into the end of the week.
Global markets roiled overnight with a smorgasbord of headlines driving riskier assets south. In Europe, the European Commission set a notice to Italy about their proposed Italian budget, potentially signalling a line in the sand. Across the channel, Brexit discussions have reached an impasse with UK PM May struggling to break the deadlock amidst internal disputes.
Over in the US, 10-year treasury bonds shot up 3-4 BPS and the Treasury released their currency report. While the Treasury fell short of naming China a currency manipulator, Trump did comment that China has failed to intervene in the recent depreciation of the CNY like China has done in the past. Ironically, the trade tariffs Trump had implemented was the reason for the declining fortunes of the CNY. Amidst this context the Kiwi remains fairly resilient despite the outlook of its biggest trade partner, China.
Moving into the close of the week, the New Zealand Dollar turns again off-shore with Chinese GDP data to digest.