NZ dollar gains against AUD on jobs, China trade

NZ dollar gains against Australian counterpart on China trade dip

By Jason Krupp

March 11 (BusinessDesk) - The New Zealand dollar rose against the Australian currency, which fell below parity with the greenback after weaker-than-expected employment figures and a report showing China – its biggest market - had a trade deficit last month.

The Australian dollar dipped to 99.93 U.S. cents and was recently at US$1.0009, down from US$1.01 yesterday. China, its biggest trading partner, reported a $7.3 billion trade deficit for February, citing trade disruptions caused by the Lunar New Year holidays. That compares to a $6.5 billion surplus in January. The Australian economy added 10,100 jobs in February, lower than market forecasts of a 20,000 increase. The jobless rate was unchanged at 5%.

"Chinese trade data was very poor so the kiwi/Aussie cross rallied on the back of that," said Tim Kelleher, head of institutional FX sales New Zealand, at ASB Institutional. "The market is positioned very long on the Australian dollar which could see the kiwi keep running back up again."

The kiwi fell to 73.55 U.S. cents from 73.60 cents yesterday, and rose to 65.31 on the trade-weighted index of major trading partners’ currencies from 65.21. It rose to 73.41 Australian cents from 73.22 cents yesterday, and gained to 61.04 yen from 60.97 yen. It rose to 53.22 euro cents from 53.07 cents yesterday, and climbed to 45.97 pence from 45.54 pence.

Europe's sovereign debt issues continued to weigh on currency markets, after Moody's Investor Service Inc. downgraded Spain's government debt by one notch to Aa2. That comes after the rating agency slashed Greece's debt rating to B1 from Ba1 earlier this week, boosting demand for U.S. dollars at the expense of the euro.

Kelleher said he expects the kiwi dollar to trade between 73.25 US cents and 73.75 cents, with 73 cents the new support level after the Reserve Bank cut the official cash rate to 2.5% yesterday.

(BusinessDesk)

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