NZ dollar heads for 0.9% weekly decline as US jobs data looms
By Paul McBeth
March 6 (BusinessDesk) - The New Zealand dollar is heading for a 0.9 percent weekly decline ahead of US employment
figures, which will provide a gauge on the strength of the world's biggest economy and give the greenback its next cue
for a direction.
The kiwi fell to 74.95 US cents at 5pm in Wellington from 75.60 cents on Friday in New York last week. It traded at
74.60 US cents at 8am and 75.50 cents yesterday. The trade-weighted index fell to 78.14 from 78.66 yesterday, and is
heading for a 0.3 percent weekly decline.
A BusinessDesk survey of 12 currency traders and strategists predicted the kiwi would trade between 74.20 US cents and
77.60 cents this week. Five expected the currency to gain, while five said it would decline and two bet it would remain
relatively unchanged.
Investors are waiting for US non-farm payrolls figures for February, which are expected to show the world's biggest
economy added 235,000 jobs that month. While the pace of new job creation will be lower than in January, analysts expect
to see a pick-up in wages, which would be seen as a positive for the US economy.
"Everybody's just waiting for payrolls, and the US dollar has been on the back foot ahead of it," said Sam Tuck, senior
FX strategist at ANZ Bank New Zealand in Auckland. "The kiwi is just flotsam and jetsam on US dollar flows and is still
really within the range."
The local currency was pushed lower after New Zealand's Reserve Bank signalled plans to impose higher capital
requirements for lending on residential property investment, which traders saw as potentially opening the path to lower
interest rates. Traders are pricing in a 4 percent chance of a rate cut at next week's monetary policy meeting, and
predict the 3.5 percent official cash rate will be 19 basis points lower over the coming 12 months, according to the
Overnight Index Swap curve.
New Zealand's two-year swap rate fell to 3.535 at 5pm in Wellington from 3.55 yesterday, while the 10-year swap rate
increased to 3.825 from 3.815.
Moody's Investors Service today said New Zealand's economy is expected to grow almost 3 percent this year, with
increased building activity offsetting declines in dairy prices. Separately, government figures today showed wholesale
trade rose 0.3 percent in the December quarter.
The kiwi dollar dropped to 4.6956 Chinese yuan at 5pm in Wellington from 4.7325 yuan yesterday, and declined to 96
Australian cents from 96.51 cents yesterday. It fell to 67.97 euro cents from 68.21 cents yesterday, and decreased to
49.19 British pence from 49.49 pence. The kiwi slipped to 89.93 yen from 90.43 yen yesterday.
(BusinessDesk)