Late Change
NZD/USD 0.8826 +0.0157
NZD/AUD 0.7984 +0.0088
NZD/JPY 68.575 +1.385
April 2013 Bond 3.41% +1.5 bps
May 2021 Bond 4.94% +1.0 bps
10-Year U.S. Spread +210 bps +12.0 bps
90-Day Bank Bill 2.92% -3.0 bps
WELLINGTON (Dow Jones)--The New Zealand dollar was sharply higher late Monday, bolstered by improving risk appetite after an apparent resolution to the U.S. debt ceiling impasse.
The Kiwi touched US$0.8841 after U.S. President Barack Obama confirmed a deal to raise the debt ceiling is in place.
Sue Trinh, senior strategist at RBC Capital Markets, said resistance for the local dollar is now at US$0.8900.
She noted, however, that while risk assets have been well bid on the back of the potential deal to raise the U.S. debt ceiling, there are still two big unknowns--firstly, whether the deal will actually pass the House and the Senate and secondly, whether the deal is enough for the U.S. to avoid a downgrade.
"Until we get greater clarity on those two issues I would be a bit cautious, but certainly for now, the market has embraced it (the deal) with a little bit of a relief rally," she said.
She underscored that the market is volatile "and headline risk is quite acute."
Looking ahead, Trinh said Thursday's domestic jobs data will be key for the market. She noted that investors have been growing accustomed to upside surprises so any "downside surprise would likely be quite disappointing."
The Reserve Bank of Australia's rate decision Tuesday will also be watched closely, she said. A survey of 19 economists by Dow Jones Newswires Friday showed 16 expect the central bank to keep its rate unchanged in August. Most expect the RBA's next rate increase to come in the fourth quarter.
Government bonds and interest rates swaps were largely unchanged Monday, a local bond trader said.
-By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; rebecca.howard@dowjones.com
