US-China trade deal hopes push NZ dollar above US67c

China says it will honour any trade deal that eventuates from talks with the Donald Trump-led United States, but in return expects the US to honour its commitments to the one-China policy. Photo / AP

The New Zealand dollar pushed through 67 US cents as exporters converted foreign sales proceeds for year-end and on expectations a preliminary trade deal between the US and China will be signed.

The kiwi, already at a five-month high, was trading at 67.11 US cents at 5pm in Wellington, from 66.98 cents in New York late Friday and 66.79 cents in Wellington last week.

The trade-weighted index rose to 73.44 from 73.41 in New York and 73.31 in Wellington last week. Kevin Morgan, a senior dealer at OMF, said the kiwi appeared to be benefiting from some US dollar weakness and an "exporters' rally" as firms with a December year-end sell dollar and euro holdings for local currency.

Signs of an improved "climate" in the trade talks between the US and China had also supported both the kiwi and the Aussie, he said.

"Certainly Australia, and us by default, would be a beneficiary."

The New Zealand dollar was at 96.01 Australian cents from 96.02 cents in Wellington on Friday.

China has negotiated the interim trade deal with the US in "real earnest" and will meet the commitments it has made, Cui Tiankai, China's ambassador to the US, told state-owned television CGTN on Saturday night.

"Since we have spent so much time with such great efforts at reaching this agreement, I think it would certainly serve the interests of both sides if this agreement is implemented," the South China Morning Post reported Cui as saying.

In turn, the US must honour its commitments to the one-China policy, particularly in regard to Taiwan, he said. Taiwan holds elections next month.

China is the biggest trading partner of New Zealand and Australia, this country's second-largest trading partner.

It has reduced import tariffs on 859 items effective January 1.

Last Tuesday, US President Donald Trump said the deal was "done" and only required translating before he and President Xi Jinping would sign it. US officials previously signalled the deal could be signed in the first week of January.

The New Zealand dollar has gained about 4 per cent against the US dollar this month, aided by a planned boost to government infrastructure spending, improved business confidence and stronger than expected third-quarter GDP data earlier this month.

OMF's Morgan said trading is thin due to the holidays and the kiwi's recent rally may peter out as exporters complete their buying as year-end approaches.

The New Zealand dollar was at 51.15 British pence from 51.35 here on Friday, at 59.92 euro cents from 60.05, at 73.22 yen from 73.08 yen, and at 4.6825 Chinese yuan from 4.6745.The two-year swap rate fell to a bid price of 1.2486 per cent from 1.2525 per cent, while 10-year swaps were at 1.7500 per cent from 1.7450 per cent.
BusinessDesk