NZ dollar holds near five-month high as US default threat eases

Thursday 17th October 2013

The New Zealand dollar held near a five-month high after US politicians found a compromise pushing its disputed Federal budget and debt limit into next year.

The kiwi dollar traded at 84.26 US cents at 5pm in Wellington, near the 84.44 cents high it reached in Northern Hemisphere trading, from 84.33 cents at 8am and up from 83.89 cents yesterday. The trade-weighted index advanced to 78.16 from 77.89 yesterday.

The Republican-controlled US House of Representatives had ratified a deal reached by Senate leaders to re-open the partially shut Federal government until Jan. 15 and push out the debt ceiling until Feb. 7.

That ends a four-week standoff between the Republican-controlled House of Representatives and President Barack Obama. Still, the deal hasn't settled any of the disputed items. Rather, it's pushed out the timeline for legislators to continue jockeying until next year's deadline.

"It's been risk-on for the last two or three days on the basis a deal would get done," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "The kiwi's looks a bit heavy around 84.50 (US cents) and there might be a bit of profit taking from the last few days."

Kelleher said the re-opening of government agencies in the US may mean data could be published, and if that comes in better or worse than expected it would remind the markets about the Federal Reserve's plans to start winding back its monetary stimulus.

New Zealand consumer sentiment continued to improve this month as the local recovery continues, with the ANZ-Roy Morgan consumer confidence index up 3 points to 122.3 from 119 in September.

The kiwi climbed to 83.09 yen at 5pm in Wellington from 82.65 yen yesterday, and increased to 88.28 Australian cents from 88.06 cents. It edged up to 62.18 euro cents from 62.08 cents yesterday and advanced to 52.73 British pence from 52.52 pence.

BusinessDesk.co.nz

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