NZ dollar trades in narrow range
NZ dollar trades in narrow range as investors weigh US tapering, budget negotiations
By Tina Morrison
Sept. 26 (BusinessDesk) – The New Zealand dollar edged up in a tight range as investors weigh the likelihood of Federal Reserve tapering and the outcome of looming US budget negotiations.
The kiwi advanced to 82.46 US cents at 8am in Wellington from 82.27 cents at the 5pm market close yesterday, having traded in a narrow range of 82.15 cents and 82.70 cents overnight. The trade-weighted index was little changed at 76.78 from 76.74 yesterday.
Investors are evaluating when the Fed will start to pull back on its US$85 billion a month monetary stimulus programme after it unexpectedly chose not to cut the programme last week. Attention is also turning to the possibility of a US debt default as Monday’s deadline looms for congressional officials to secure a budget deal which would allow the government to keep running.
“The NZD/USD has traded a fairly tight range over the past 24 hours,” Kymberly Martin, a strategist at Bank of New Zealand, said in a note. “With little on the domestic agenda through to week-end, expect the NZD to take its cue from broad global risk sentiment and the tone set by the USD.”
In the US today, traders will be eyeing news on US budget negotiations, home sales data, the latest reading of second-quarter GDP, weekly initial jobless claims and the Kansas City Fed factory index.
Attention will increasingly turn from Fed policy to fiscal policy in coming weeks, said BNZ’s Martin.
“Moving into October, we have the possibility of US government shutdown if US budget negotiations are not successful and/or the US ‘debt ceiling’ is unable to be raised,” Martin said. “These issues will likely be wrung out at the last moment. In the interim however, expect market volatility.”
The New Zealand dollar advanced to 88 Australian cents at 8am in Wellington from 87.75 at the 5pm market close yesterday. The local currency slipped to 60.97 euro cents from 61.10 cents yesterday and weakened to 51.27 British pence from 51.47 pence. The kiwi was little changed at 81.19 yen from 81.20 yen yesterday.