The NZDUSD opens at 0.8270 this morning.
The US government partially shut down for the first time since 1996 due to the inability of the Democrats and Republicans to approve a new federal budget. The Republicans have tied their budgetary approval to the delay of President Obama major health care reforms, something with Obama is unwilling to concede.
The USD was initially under pressure due to the US government shut down, which pushed the NZDUSD to 1-week highs. However, the USD rebounded (& NZDUSD fell) after a report showed the US manufacturing sector last month expanded at its fastest pace in almost 2 ½ years.
If the US government shut down persists, it may hurt economic growth and cause a delay in the US Fed tapering its very stimulatory monetary policy. This is likely to hurt the USD, and boost the NZDUSD.
The NZDAUD fell sharply yesterday after the Reserve Bank of Australia kept interest rates on hold, but did not give any explicit easing bias.
Global equity markets were mostly higher on the day – Dow +0.2%, Nikkei +0.2%, Shanghai +0.6%, FTSE -0.03%, DAX +0.8%
The Gold Price sank 3% to USD$1290 an ounce. Oil fell 0.5% and base metal prices dropped on the day.
The NZD opens at 0.8270 USD, 0.8805 AUD, 0.8540 CAD, 0.6110 EUR, 0.5105 GBP, & 80.90 JPY.
ANZ Commodity Prices will be released at 1:00pm today.
Australian Building Approvals, New Home Sales, and Trade Balance all hit the tapes at 2:30pm. However, the markets primary focus will continue to be on developments with the US budget negotiations and government shutdown.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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