NZ dollar gains as Boehner stokes optimism fiscal cliff will be averted, stocks rise
By Paul McBeth
Nov. 29 (BusinessDesk) - The New Zealand dollar gained after comments from US House of Representatives Speaker and senior Republican John Boehner stoked optimism policymakers will set aside their differences and bypass the fiscal cliff of US$607 billion in automatic tax hikes and spending cuts, stoking investor confidence and pushing stocks higher.
The kiwi dollar rose to 82.34 US cents at 8.30am in Wellington from 82.14 cents yesterday. The trade-weighted index advanced to 73.64 from 73.46.
Stocks on Wall Street rallied after Boehner said he was willing to put revenues up for negotiation if it was accompanied by spending cuts and that he was optimistic lawmakers could "avert this crisis sooner rather than later."
Investors have been fretting the world's biggest economy will be stuck in a stalemate similar to this year's debt ceiling debate that saw Standard & Poor's cut its triple-A credit rating, and ultimately slip back into recession. The Standard & Poor's 500 Index gained 0.4 percent.
Markets rallied after "some positive words from Boehner on trying to solve the fiscal cliff," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "The kiwi should squeeze up on the day."
The currency may trade between 82.25 US cents and 82.75 cents, with a fall in commodity prices holding back gains, he said.
Traders will be looking for Australian capital expenditure figures today, which are expected to show the world’s 12th biggest economy might be starting to slow down after the resources boom gave it a buffer during the global financial crisis.
Australian business investment rose 2 percent in the three months ended Sept. 30 after growing 3.4 percent in the previous quarter, according to a Bloomberg survey of economists. The kiwi was little changed at 78.60 Australian cents from 78.56 cents yesterday.
The currency rose to 67.38 yen from 67.22 yen yesterday, and increased to 51.43 British pence from 51.30 pence. It advanced to 63.68 euro cents from 63.50 cents yesterday.