New Zealand dollar climbed to its highest point in two and a half weeks against the US peer on Monday, as the greenback was pressured due to continuing budget deadlock in the United States.
NZD/USD hit a session high at 0.8378 at 8:05 GMT, also the pairs highest point since September 23rd, after which consolidation followed at 0.8360, gaining 0.46% for the day. Support was likely to be found at October 11th low, 0.8268, while resistance was to be encountered at September 23rd high, 0.8390.
It became clear that negotiations between Barack Obama and House Speaker John Boehner broke down over the weekend. Bloomberg reported, that President Obama, in a phone call with House Minority Leader Nancy Pelosi of California, “reinforced that there must be a clean debt limit increase” and a stopgap spending measure also free of policy conditions, before budget negotiations were to begin.
Democratic policymakers warned during the weekend, that a lack of movement towards an agreement on the budget matter could have an effect on financial markets.
In addition, central bankers and finance ministers, gathering in Washington for the annual meeting of the International Monetary Fund and World Bank during the weekend, called for “urgent action” in order to end the fiscal deadlock in the country.
In the mean time, Chinese overseas shipments dropped 0.3% in September on annual basis, while imports climbed 7.4%, according to an official report, released on October 12th. The median estimates pointed a 5.5% increase in the export figure and 7% climb in imports. As a result, Chinese trade surplus was lesser in September, 15.2 billion USD, compared to a month ago, when the figure was 28.6 billion USD. Preliminary estimates pointed that the trade surplus will narrow less in September to reach 27.7 billion USD. This data briefly influenced the kiwi dollar earlier today, as China is New Zealands second largest export market.
New Zealands currency found support also, after the release of a report on Monday, which showed that business NZ performance of services index (PSI) advanced to a reading of 55.6 in September from 53.3 in August, as the latter value was a revision up from 53.2 previously. Values above the key level of 50.0 are usually an indication that activity in the sector has expanded. The more values distance from the average level, the stronger prospects of a contraction or development are.
Elsewhere, the kiwi was higher against the Aussie, as AUD/NZD cross dropped 0.50% on a daily basis to trade at 1.1326 at 9:00 GMT.