Kiwi Dollar entrenched as US squabbling ensues

12:07 AEST, Wednesday 9 October 2013

Kiwi Dollar entrenched as US squabbling ensues

By Andrew May (Sales Trader, CMC Markets New Zealand)

Don't expect too much from growth currencies whilst what looks to be a long and drawn-out US political stalemate continues. The Kiwi dollar has withstood a blatant steroid push from the RBNZ over premeditated interest rate hikes as early as Q2 next year; in addition to a surprise no tapering call from the world’s strongest economy; and regardless of further externally dictated risk events is currently still holding its head up at just under US 83c.

Now well into the 2nd week of the Republican Speaker John Boehner .v. President Obama stand-off, the NZ dollar opens today at US 82.80c and AU 88c. Global markets may tire of the politicking and retreat until a decision is made. Not a great way to begin US earnings season.

The DOW has shed all of its September gains in the first 10 days of this month and is sensing worry as short term treasury yields jumped the highest since 2008.

Throughout all this turmoil however, the New Zealand economy recorded the best business optimism in 10 years, providing further onus that businesses are enveloping greater optimism in operating conditions.

The NZ dollar was little changed however, as the greater global event plays out. Expect to see a continuation of ‘range trading’ between around the US 82.75 through 83.30 levels until a decision is made not only on the direction the US powerhouse, but also the greater global economy as a consequence. For now we are merely spectators.
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