NZ dollar gains as Australian unemployment rate falls, ECB looms
By Paul McBeth
Sept. 6 (BusinessDesk) - The New Zealand dollar gained in ‘thin’ trading after Australia's unemployment rate
unexpectedly fell and as investors prepare for the European Central Bank meeting.
The kiwi edged up to 79.56 US cents at 5pm in Wellington from 79.43 cents at 8am and 79.45 cents yesterday. The
trade-weighted index was little changed at 71.62 from 71.63 yesterday.
Australia's jobless rate fell to 5.1 percent last month, according to government figures, as the participation rate
shrank to 65 percent and the work force fell by 8,800. Traders jumped on the headline figure, lifting the Australian
dollar 0.3 percent to US$1.0213. The figures come after yesterday's slowing pace of growth in the second quarter weighed
on support for Australian assets.
"The kiwi got dragged higher on the back of the Aussie jobs data," said Tim Kelleher, head of institutional FX sales at
ASB Institutional. "If you look at the detail and the participation, people stopped looking for jobs."
Markets are preparing for the ECB meeting on Thursday where President Mario Draghi is expected to unveil plans for an
unlimited bond buying plan for distressed government debt with maturities of up to three years. The bank has been
looking at ways to protect the region's single currency and shore up the euro-zone's fragile financial stability.
The kiwi fell 63.13 euro cents, near a two-month low, from 63.34 cents yesterday.
ASB's Kelleher said the kiwi may break below 63 euro cents, with the German Constitutional Court to rule on the legality
of the European Stability Mechanism and the region's bail-out fund next week.
"That could kybosh lots of things - it's all tentative steps," he said.
The Bank of England will review monetary policy on Thursday and is likely to keep the benchmark interest rate at 0.5
percent and maintain its asset purchase programme at 375 billion pounds.
The kiwi was little changed at 50.06 pence from 50.08 pence yesterday, and was almost unchanged at 77.87 Australian
cents from 77.88 cents. The currency traded at 62.40 yen from 62.47 yen yesterday.
(BusinessDesk)