NZ dollar little changed in face of US shutdown; Yellen appointment looms

The New Zealand dollar was little changed as the US Federal government shutdown drags on and amid expectations Janet Yellen will get the nod to head up the Federal Reserve tomorrow.

The kiwi traded at 82.89 US cents at 5pm in Wellington from 82.90 cents at 8am and 82.93 cents yesterday. The trade-weighted index was almost unchanged at 76.87 from 76.88 yesterday.

The stalemate between US legislators continues to dominate financial markets, with investors unwilling to take new positions as the Federal budget remains in limbo, leaving the world’s biggest economy open to a potential debt default next week.

“Some of these issues start to get a lot more serious when the forecast hitting of the debt ceiling comes sometime next week,” said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. “There’s not too much beyond the US to drive the kiwi for a while.”

The US Dollar Index, a measure of the greenback against a basket of currencies, rose to 80.122 at 5pm in Wellington from 80.027 yesterday amid news San Francisco Federal Reserve President Yellen will get the top job at the US central bank tomorrow. US President Barack Obama is holding a press conference at 3pm on Wednesday in Washington, where Fed chairman Ben Bernanke and Yellen are expected to attend.

Yellen has been seen as the likely replacement since former Treasury secretary Larry Summers pulled out of the race.

The kiwi slipped to 87.84 Australian cents at 5pm in Wellington from 87.98 cents yesterday ahead of September employment figures which will likely show jobs growth across the Tasman.

The local currency traded gained to 80.66 yen from 80.38 yen yesterday, and was little changed at 61.08 euro cents from 61.14 cents. It was unchanged at 51.57 British pence at 5pm in Wellington from the same time yesterday.

(BusinessDesk)