NZ dollar rises as greenback falls on Mexican tariff worries

NZ dollar rises as greenback falls on Mexican tariff worries

By Jenny Ruth

June 6 (BusinessDesk) - The New Zealand dollar rose against the greenback as talks between US and Mexican officials failed to reach a deal that could stave off the tariffs President Donald Trump has threatened on all Mexican goods entering America from Monday.

The kiwi was trading at 66.26 US cents at 5pm in Wellington from 66.16 at 7:55am. The trade-weighted index climbed to 72.76 points from 72.66.

Tweeting from Ireland, Trump said there had been progress during the talks with Mexico, “but not nearly enough.” He is trying to use tariffs to force Mexico to stop Central American refugees reaching the US border to claim asylum.

Analysis by the Perryman Group, an economic consulting firm, estimates the Mexican tariffs could cost 400,000 US jobs. Much of the US car industry sources parts from Mexico and would be hurt by the tariffs, as would consumers facing higher prices on everything from avocados to clothing and furniture.

The US is also in the midst of a trade war with China that has roiled markets all year. Trump has postponed threatened tariffs on Japanese goods.

“It’s not just Mexico, it seems all and sundry are coming under the hammer,” says Mike Shirley, a dealer at Kiwibank.

The Trump threats against Mexico are “just another event piled onto an ever-growing heap of global risk,” Shirley says.

Also weighing on the US dollar was a private employment survey from payroll processing firm ADP which showed companies added just 27,000 new jobs in the US in May, well below market expectations of 173,000.

Shirley says the survey tries to mirror the official non-farm payrolls data but has a mixed history. The low figure, the worst since 2010, “could just be an anomaly.”

The non-farm payrolls data for May is due overnight on Friday, New Zealand time.

The New Zealand dollar was trading at 94.97 Australian cents from 94.93, at 52.21 British pence from 52.11, at 58.98 euro cents from 58.93, unchanged at 71.70 yen and at 4.5811 Chinese yuan from 4.5692.

The New Zealand two-year swap rate edged up to 1.4002 percent from 1.3880 yesterday while the 10-year swap rate nudged up to 1.9100 percent from 1.9000.

(BusinessDesk)

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