The New Zealand dollar is heading for a 0.7 per cent weekly gain.
The New Zealand dollar is heading for a 0.7 per cent weekly gain as the world waits to see if US policymakers reach a deal to avoid a shutdown.
The kiwi traded at 73.08 US cents as at 5pm in Wellington unchanged from 8.30am and up from 72.60 cents yesterday. It was at 72.54 US cents last Friday in New York. The trade-weighted index advanced to 74.98 from 74.89 yesterday.
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A possible shutdown in the US continued to weigh on the greenback even after the US House of Representatives passed a bill to fund government operations through February 16 and avoid agency shutdowns this weekend as it needs to clear Senate before the government's funding expires at 12:01am EST Saturday.
The kiwi fell to 72.87 US cents when New Zealand's manufacturing activity fell to a five-year low in December as businesses deferred major decisions until there is more clarity after the change in the government. The BusinessNZ-Bank of New Zealand performance of manufacturing index fell 6.5 points to a seasonally adjusted 51.2 in December, the lowest result since December 2012.
BNZ head of research Stephen Toplis said the data indicate future production may come under some pressure as the decline in new orders is proving greater than the decline in inventory and said it meant the fourth quarter gross domestic product growth might be lower than expected.
The PMI showed a "considerable drop," which also pressured the kiwi against the Aussie, said Martin Rudings, senior dealer foreign exchange at OMF in Wellington. The kiwi traded at 91.12 Australian cents versus 91.26 cents yesterday.
Rudings said while the local currency struggled against the Aussie, it pared its losses against the greenback as "everything is sort of poised" to see if the vote goes through in the US.
He said he expects the bill to pass as "no one wants to be responsible for shutting down the US government" and the greenback will likely rally. Rudings said the kiwi could fall below 72.50 US cents and then likely find support at 72 cents.
The local currency traded at 4.6721 Chinese yuan from 4.6739 yuan and 80.97 yen from 80.91 yen yesterday. It was at 59.57 euro cents from 59.60 cents and 52.49 British pence from 52.58 pence yesterday.
New Zealand's two-year swap rate rose 2 basis points to 2.26 per cent while the 10-year swap rose 4 basis points to 3.24 per cent.
'This decision has not been made lightly'.