The New Zealand dollar fell below 69 US cents after US president Donald Trump said he would target US$200 billion more Chinese products for tariffs and China threatened to retaliate, ramping up concerns about a trade war that could dent global growth.
The kiwi dollar fell to 68.96 US cents as at 8am in Wellington, having sunk as low as 68.83 cents yesterday evening NZ time from 69.35 cents at 5pm. The trade-weighted index fell to 73.32 from 73.49.
Trump said he would impose a 10 percent tariff on the expanded list of Chinese products and China's Ministry of Commerce responded by saying it would impose its own qualitative and quantitative measures The CRB Index of 19 commonly traded commodities fell 1.2 percent to the lowest level in more than two months while the US dollar index rose to an 11-month high. The kiwi dollar also fell against the yen as declining risk appetite stoked the appeal of so-called safe-haven assets and US Treasuries rose.
"The NZD will continue to struggle in an environment where trade tensions are front and centre," said Sharon Zollner, chief economist at ANZ Bank New Zealand. "As long as it remains
a bilateral dispute New Zealand is likely to stay out of the crossfire, but our exporters would be indirectly affected should things escalate sufficiently to damage the Chinese economy."
Traders will get an update on New Zealand's external balance today, with the release of the first-quarter balance of payments figures, which are expected to show the current account deficit widened to 2.8 percent of gross domestic product from 2.7 percent.
The kiwi didn't move much after the results of the latest Global Dairy Trade auction were published overnight. The GDT price index fell 1.2 percent from the previous auction two weeks ago. The average price was US$3,481 a tonne. Some 21,634 tonnes of product was sold, up from 21,580 tonnes two weeks ago. Whole milk powder slid 1 percent to US$3,189 a tonne.
Also due out today locally is the Westpac consumer confidence survey for the second quarter.
The kiwi fell to 93.44 Australian cents from 93.73 cents yesterday. It fell to 4.4687 yuan from 4.4706 yuan and dropped to 75.97 yen from 76.05 yen. It fell to 59.52 euro cents from 59.60 cents after a relatively dovish speech by European Central Bank president Mario Draghi and traded at 52.33 British pence from 52.28 pence.