The New Zealand dollar looks set to breach 85 US cents for the first time in 15 months provided third-quarter growth figures don't disappoint and Washington remains stalled on fiscal cliff talks.
The kiwi dollar recently traded at 84.60 US cents from 84.56 cents in New York on Friday. The trade-weighted index rose to 75.45 from 75.31.
The local currency may trade in a range of 83.50 US cents to 85.70 cents this week, according to a BusinessDesk survey. The kiwi dollar may ease back from its highs toward the end of the week and is looking somewhat "stretched" versus the yen after surging to a four-year high today on the landslide victory of Japan's Liberal Democratic Party, whose aims including weakening the yen.
Politicians in Washington are running out of time to find agreement on averting the fiscal cliff, which kicks in on January 1 with some US$600 billion of tax hikes and spending cuts that could push the world's biggest economy into recession in 2013. Late on Saturday, a source told Reuters that President Barack Obama was unmoved by a Friday proposal from US House Speaker John Boehner.
It is a data-heavy week on the home front, with third quarter balance of payments figures due on Wednesday and gross domestic product on Thursday. Gross domestic product slowed to a 0.5 per cent in the three months ended September 30, according to a Reuters survey of nine economists, after a 0.6 per cent expansion in the second quarter. Forecasts ranged from zero growth of 0.7 per cent, suggesting there's a risk of a weaker outcome that would weigh on the kiwi.