The New Zealand dollar rose as Hurricane Harvey caused widespread flooding in the Houston area, adding to negative sentiment for the US dollar already suffering from lack of policy momentum from the Trump administration and the looming showdown on raising the US debt ceiling.
The kiwi dollar gained to 72.53 US cents as at 8am in Wellington from 72.38 cents late yesterday. The trade-weighted index was little changed at 75.88 from 75.86.
The Washington Post reported the US has until early October to raise debt limit before Treasury runs out of money to pay federal government's bills and debate among lawmakers is likely to see a repeat of the standoffs in 2011 and 2013.
Complicating the latest debate is President Donald Trump's frustration at seeing his policy plans stalled. Meanwhile the storm raging over Houston could be causing as much as US$100 billion of damage, making it the worst since Hurricane Katrina, and disrupting a metropolitan area that accounts for about 3 per cent of US gross domestic product, said Con Williams, rural economist at ANZ Bank New Zealand.
"The impact is likely to weigh on near-term US data releases creating some additional uncertainties, alongside the political ones, on the underlying performance of the US economy," Williams said in a note.
