New Zealand dollar traded steadily against its US rival on Thursday, as the US Congress voted to fund the federal government, put an end to the partial shutdown and raise the debt ceiling.
NZD/USD touched a session low at 0.8416 during the early phase of Asian trade, after which consolidation followed at 0.8429, gaining 0.04% for the day. Support was likely to be received at October 14th low, 0.8308, while resistance was to be encountered at September 19th high, 0.8436.
The vote on US debt last night passed by wide margins – an 81-18 vote in the Democratic-led Senate and a 285-144 vote in the Republican-controlled House. It allows the United States to avert default and end the partial shutdown, which began on October 1st and has cost 24 billion USD to the economy. US President Barack Obama signed the bill earlier today, according to a White House statement, with this measure allowing government workers return to their jobs as soon as today. At the same time, the country has been enabled to continue paying its debts, benefits and salaries. “We’ll begin reopening our government immediately and we can begin to lift this cloud of uncertainty and unease from our businesses and from the American people,” Barack Obama said last night at the White House after the vote, cited by Bloomberg.
With the vote passed, a new set of deadlines has been set. The first deadline, for budget negotiations until December 13th, set up more rounds of political debates over taxes and spending on programs, including Social Security and Medicare. In addition, the reached agreement provides government funding at Republican-backed spending levels through January 15th 2014, and also suspends the debt ceiling through February 7th. The US dollar lost ground against peers today, following the initial upward reaction to the above mentioned agreement, as concerns mounted that the 16-day government shutdown could have influenced economic development in the country.
Meanwhile, on Thursday according to a survey on business confidence in New Zealand by the National Australia Bank (NAB), the corresponding index accelerated to a reading of 122.3 in October from 118.8 in September.
This data came out one day after Statistics New Zealand reported that the index of consumer prices (CPI) in the country rose 0.9% during the third quarter of the year, marking the fastest rate of increase since Q2 2011, following the 0.2% gain in the second quarter. In annual terms, the CPI reached 1.4% during Q3, doubling the increase rate, recorded in Q2, 0.7%.
Also on Wednesday, Fletcher Building, one of the largest companies operating in New Zealand, warned of the potential negative effects of the strong national currency. However, the Reserve Bank of New Zealand (RBNZ) has shown no intentions of weakening the kiwi dollar.
Elsewhere, the kiwi was higher against the Australian dollar, with AUD/NZD cross down 0.12% on a daily basis to trade at 1.1326 at 6:54 GMT. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, dropped to 80.350, after reaching 80.810 during late US trade on Wednesday.
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