The New Zealand dollar was little changed as markets continue to wait for US politicians to compromise over the Federal budget, overshadowing local data showing the fastest pace of quarterly inflation in more than two years.
The New Zealand dollar was little changed as markets continue to wait for US politicians to compromise over the Federal budget, overshadowing local data showing the fastest pace of quarterly inflation in more than two years.
The kiwi traded at 83.88 US cents at 5pm in Wellington, up from 83.64 cents at 8am, and little changed from 83.85 cents yesterday. The trade-weighted index was 77.88 from 77.76 yesterday.
There was heavy trading in interest rate markets in Australia today as traders started protecting their positions as the deadline for the US to raise its debt ceiling draws nearer. A Republican-controlled House of Representatives is at loggerheads with the President Barack Obama and a Democrat majority in the Senate over the Federal budget, putting investors on tenterhooks as they wait for policymakers to avert a potential financial crisis if the world's biggest economy defaults on its sovereign debt.
"Australian (interest rate) markets were heavily traded today as people covered themselves," said Stuart Ive, senior client adviser at OM Financial in Wellington. "The kiwi's trading in a tightening range and rightly so because market participants don't want to get caught on this."
The political stalemate in the US overshadowed local statistics showing the pace of annual inflation in New Zealand accelerated to 1.4 percent in the September quarter from 0.7 percent in the June period. The increase was mainly driven by rising petrol prices and expensive out-of-season vegetables.
OM Financial's Ive said if the effects of the petrol price rise and seasonal food was removed, "inflation was relatively benign."
The Reserve Bank of New Zealand is watching the construction booms in Auckland and Christchurch closely to see whether wage growth in those areas will spill over into wider inflation. Prices for newly built houses increased 0.9 percent in the quarter, taking the annual pace to 4.1 percent.
The New Zealand dollar was little changed at 88.04 Australian cents at 5pm in Wellington from 87.98 cents yesterday, and edged higher to 82.66 yen from 82.56 yen. It rose to 62.09 euro cents from 61.83 cents yesterday and was little changed at 52.52 British pence from 52.43 pence.
(BusinessDesk)
