New Zealand Dollar recovers slightly amid US government shutdown concerns and RBNZ outlook

Key Movers

The US dollar weakened on Monday as investors grew increasingly cautious ahead of a critical funding deadline, with just days remaining before the government faces a potential shutdown on October 1. Heightened political uncertainty has intensified market volatility, as stakeholders await the outcome of last-minute negotiations aimed at averting a lapse in government funding. In a bid to resolve the impasse, US President Donald Trump convened a high-stakes meeting at the White House on Monday, bringing together political leaders for what was described as a final effort to strike a deal. The White House emphasized that the President is giving Democrats “one last chance to be reasonable” regarding the passage of a short-term continuing resolution to keep government operations funded. Meanwhile, House Minority Leader Hakeem Jeffries responded by signaling that Democrats remain open to compromise but drew a firm line against any cuts to essential healthcare programs. The debate underscores the broader ideological divide between parties, complicating efforts to secure bipartisan agreement. On the other side of the aisle, Republicans have insisted that the Senate must act swiftly on the stopgap funding bill already passed by the House of Representatives. With time running out, both parties face mounting pressure to reach a consensus and prevent the potentially damaging economic and political consequences of a government shutdown. The uncertainty surrounding these developments has contributed to broad US Dollar softness in global markets, as investors weigh the risks associated with a shutdown against the backdrop of an already fragile economic environment.