The New Zealand dollar was little changed as investors hold off making bets on the currency while US lawmakers remain in a stalemate over budget talks as the deadline to increase their debt ceiling looms.
The kiwi was little changed at 82.90 US cents at 8am in Wellington from 82.93 cents at the 5pm market close yesterday. The trade-weighted index was little changed at 76.86 from 76.88 yesterday.
The US government partial shutdown is now in its second week after politicians failed to agree on passing the budget. Of more concern to financial markets is the approaching October 17 deadline for Congress to raise its debt ceiling or risk defaulting on its debt obligations.
"We are starting to see the political stalemate erode financial market sentiment, risk aversion is pushing higher, equity markets are selling off and the market is pricing in an increased risk of US government default in the short-term US yields, but we haven't seen any of that take a toll on foreign exchange markets today," said Mike Jones, currency strategist at Bank of New Zealand.
"The kiwi has just been washing around in what is now a pretty familiar 82.70-83.30 US cent range and that continued again overnight. The risk today is that we see a downside break from that range," Jones said. "Investors are starting to get rattled and that should see the kiwi dollar under pressure."