NZ dollar falls to 3-week low vs Australian as figures show diverging labour markets
By Paul McBeth
Aug 9 (BusinessDesk) - The New Zealand dollar fell to a three-week low against its Australian counterpart as weak local
employment figures contrasted poorly with an improving labour market across the Ditch.
The kiwi dollar fell to 76.76 Australian cents at 5pm from 77.01 cents yesterday. It traded at 81.49 US cents from 81.49
cents at 8am, up from 81.19 cents at 5pm in Wellington yesterday.
New Zealand's unemployment rate unexpected rose 0.1 of a percentage point to 6.8 percent, while Australia's rate of
joblessness fell to 5.2 percent, highlighting the divergence between the neighbouring nations. The local jobs figure may
prompt the Reserve Bank to push out its forecast path to higher interest rates, while Australia's reaffirms the view of
moderate growth across the Tasman.
"The kiwi has probably gone as low as it should go against the Aussie, and I expect it to grind back from here," said
Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "It was a disappointment New Zealand's
unemployment rate didn't drop, but it's still pretty good" compared to other nations pushing 10 percent, he said.
Traders are waiting for Chinese figures including industrial production and retails after data showed consumer prices
rose 1.8 percent and producer prices dropped 2.9 percent.
Reserve Bank Governor Alan Bollard delivered a second public speech this week in Canberra, saying New Zealand's fiscal
consolidation "may persist for a while yet" as the economy slowly rebalances away from the debt-fuelled consumption of
the past couple of decades.
“Fiscal austerity is probably not as contentious when monetary policy loosening can offset its short-term effects on
economic activity," he said.
His comments come after Prime Minister John Key told Bloomberg News the central bank has scope to cut rates further, and
that one-way bets the kiwi will gain were "not a very smart thing to do."
The trade-weighted index was little changed at 73.02 from 72.98, and the kiwi edged up to 63.87 Japanese yen from 63.77
yen yesterday. It increased to 65.71 euro cents from 65.5 cents yesterday, and fell to 51.91 British pence from 52.03
pence.
(BusinessDesk)