NZ dollar gains against broadly weaker greenback after jobs report misses expectations
By Jonathan Underhill
Oct. 5 (BusinessDesk) - The New Zealand dollar rose against a broadly weaker greenback after soft US labour market data
reduced expectations the Federal Reserve will rush to raise interest rates.
The kiwi rose to 64.59 US cents as at 8am in Wellington, from 64.36 cents in late New York trading on Friday and from
63.90 cents in Wellington at the end of last week. The trade-weighted index rose to 70.30 from 70.16 in New York and
69.73 in Wellington on Friday.
The US added 142,00 jobs last month, Labor Department figures showed, compared with expectations of 201,000 jobs, while
figures for August and July were revised down and the unemployment rate held unchanged at 5.1 percent. Employment is a
key measure for the Fed, which aims to normalise monetary policy after cutting the Federal Funds rate to near zero in
December 2008 in response to the global financial crisis. The Fed is preparing to raises rates as traders put 78 percent
odds on the Reserve Bank of New Zealand cutting the official cash rate a quarter point to 2.5 percent on Oct. 29.
The US jobs report "was disappointing in its headline and its detail," said Kymberly Martin, a strategist at Bank of New
Zealand. "An October Fed hike how appears well off the cards, and even our core view of a hike in December appears
shaky."
Martin said the kiwi may break out of its trading range of the past six weeks by trading above 64.60 US cents and if the
currency holds onto its gains, the next level of resistance would be at 65 cents.
The local currency rallied through the latter half of last week as rising dairy prices helped bolster flagging business
sentiment, and provided traders with more confidence about the resilience of New Zealand's economy.
The kiwi traded at 91.38 Australian cents from 91.28 cents in New York and from 90.98 cents in Wellington on Friday,
ahead of the Reserve Bank of Australia's interest rate decision tomorrow, where the odds of a rate cut are seen at just
22 percent.
The kiwi edged up to 57.50 euro cents from 57.42 cents in New York on Friday and rose to 42.48 British pence from 42.43
pence. It rose to 77.50 yen from 77.21 yen and rose to 4.1040 yuan from 4.0919 yuan.
(BusinessDesk)