NZ dollar gains as US Senate cuts deal to end govt shutdown, stoking risk appetite
By Paul McBeth
Jan. 23 (BusinessDesk) - The New Zealand dollar rose back above 73 US cents as policymakers reached a deal to end a
federal government shutdown, underpinning investor confidence and helping push stocks on Wall Street to new highs.
The kiwi gained to 73.06 US cents as at 8am in Wellington from 72.81 cents yesterday. The trade-weighted index advanced
to 75.05 from 74.85.
US senators agreed to legislation funding the federal government after an impasse last week led to a shutdown of
operations for three days, raising fears about political uncertainty in the world's biggest economy. Funding bills need
a higher level of support than a bare majority in the Senate, meaning the opposition Democrats can stall some measures.
The political agreement added to the positive tone in financial markets with stocks on Wall Street reaching new highs on
optimism over corporate earnings and as the International Monetary Fund raised its forecast for global growth.
"With a solution to the US shutdown perhaps on the cards (at least at stopgap one), focus may switch to the health of US
corporate earnings – a strong start to 2018 suggests a lot of optimism has been priced in," ANZ Bank New Zealand rural
economist Con Williams said in a note. "With the USD being somewhat unloved in buoyant times, maybe a softening in risk
sentiment is required to turn its fortunes around."
Local data today include the Business New Zealand-BNZ performance of services index and November accommodation data,
with the focus largely on Thursday's December quarter consumers price index.
The local currency rose to 81.15 yen from 80.64 yen yesterday ahead of a Bank of Japan review, which will be watched for
any signs the monetary authority is dialling back its ultra-loose policy.
The kiwi increased to 91.25 Australian cents from 91.08 cents yesterday and gained to 4.6784 Chinese yuan from 4.6628
yuan. It traded at 52.32 British pence from 52.48 pence yesterday and was little changed at 59.65 euro cents from 59.52
cents.
(BusinessDesk)
ends