Sharechat Logo

NZ dollar weakens as looming US budget standoff saps risk appetite

Monday 30th September 2013

Text too small?

The New Zealand dollar fell on concern a looming US budget standoff poses a risk to US growth and global risk appetite. The kiwi pared its decline after a survey showed local business confidence at a five-year high.

The kiwi traded at 82.85 US cents at 5 pm in Wellington, little changed from the start of the day and down from 83.19 cents in late local trading on Friday. The trade-weighted index fell to 77.17 from 77.30 on Friday.

US Democrats and Republicans need to agree on spending cuts overnight to avoid a partial shutdown of the federal government on the Oct. 1 deadline. Getting accord on the budget is only the first leg of the challenge in Washington, with a deadline looming in October to lift the US$16.7 trillion debt ceiling.

"If agreement cannot be reached, the US could default on its debt," said Imre Speizer, senior market strategist at Westpac Banking Corp. "Both the above US fiscal issues are negative for global risk appetite, and should therefore hurt NZD/USD in the near term."

The kiwi pared its decline after New Zealand business confidence climbed to a new five-year high. The ANZ Business Outlook survey showed a net 54 percent of firms expect general business conditions to improve in the year ahead, up from 48.1 percent in August and the highest since March 1999. Firms seeing a pickup in their own business activity in the year ahead rose to a net 45 percent from 43.3 percent.

The New Zealand dollar may decline this week as investors shun growth sensitive currencies amid a possible US government shutdown, according to a BusinessDesk survey of nine traders and strategists.

The local currency may trade between 81 US cents and 84.05 cents this week, the survey shows. Five expect the currency to decline while two expect it to advance and two say it will remain unchanged.

The New Zealand dollar edged up to 88.98 Australian cents, from 88.77 Australian cents at the start of the day and from 88.64 cents on Friday.

The local currency weakened to 81.11 yen from 81.76 yen on Friday after Japanese Finance Minister Taro Aso said he wasn't considering lowering the effective corporate tax rate, surprising investors who had positioned for a weaker yen on expectations of more fiscal stimulus.

The kiwi slipped to 61.29 euro cents from 61.47 cents on Friday and weakened to 51.21 British pence from 51.64 pence.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report