US Markets

Australia, NZ dollars ease as trade deal worry hits risk assets

Credit: REUTERS/THOMAS WHITE

The Australian and New Zealand dollars eased slightly on Thursday, as a possible delay in the signing of a Sino-U.S. tariff deal sapped investor enthusiasm though better-than-expected Aussie trade data capped some losses.

By Swati Pandey

SYDNEY, Nov 7 (Reuters) - The Australian and New Zealand dollars eased slightly on Thursday, as a possible delay in the signing of a Sino-U.S. tariff deal sapped investor enthusiasm though better-than-expected Aussie trade data capped some losses.

The Australian dollar AUD=D4, a liquid hedge for risk, slipped 0.25% to $0.68655 at 0314 GMT, having failed key chart resistance around $0.6929 four times in just the past week.

The next stop for the Aussie is $0.6849, a breach below could see it sliding to $0.6811.

The New Zealand dollar NZD=D4 was down 0.3% at $0.6349, on track for its fourth straight session of losses.

Sentiment took a turn following a Reuters report that a meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping to sign an interim trade deal could be delayed until December as discussions continue over terms and venue.

Risk assets were underwhelmed by the news with Asian stocks starting in the red on Thursday after scaling multi-month highs in recent days. MKTS/GLOB

On the home front, Australia clocked its 21st consecutive monthly trade surplus in September as exports jumped strongly led by liquefied natural gas, farm goods and gold, official data on Thursday showed.

However, consumption imports remained soft and were little changed from a year ago, reflecting the weakness in household spending.

Despite a better-than-expected September surplus of A$7.1 billion ($4.9 billion), economists expect an ongoing slowdown in Australia's economy to extend in coming quarters. Data on third quarter gross domestic product (GDP) is due next month.

"After adjusting for higher export prices and higher real import volumes, we expect net exports to subtract 0.1 percentage points from Q3 GDP growth. In other words, trade should not continue to support overall GDP growth and mask softness in domestic activity," Citi economist Josh Williamson said.

Investors will keep an eye on updated forecasts from the Reserve Bank of Australia (RBA) on the economy and inflation at 0030 GMT on Friday.

New Zealand government bonds 0#NZTSY= gained slightly to be down about 3 basis points across the curve.

Australian government bond futures inched up too, with the three-year bond contract YTTc1 rising 4 ticks to 99.155. The 10-year contract YTCc1 climbed 5.5 ticks to 98.7800.

($1 = 1.4571 Australian dollars)

(Editing by Jacqueline Wong)

((swati.pandey@thomsonreuters.com; +61 2 9321 8166; Reuters Messaging: twitter.com/swatisays))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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