NZ dollar holds above 63 US cents after US jobs data

The New Zealand dollar held above 63 US cents after US employment data weighed on the greenback overnight Friday.

The kiwi was trading at 63.08 US cents at 7:55 am in Wellington from 63.16 US cents late Friday in New York. The trade-weighted index was at 70.50 from 70.44.

The US unemployment rate declined to 3.5 percent in September, and total non-farm payroll employment rose by 136,000, the US Bureau of Labor Statistics reported. The unemployment number was the lowest since 1969, it said.

The growth in non-farm payrolls, however, was weaker than the expected 145,000. Jobs growth in August was revised up to 168,000 from the 130,000 initially reported.

“The market viewed the employment data as hitting a bit of a sweet spot,” said Kiwibank FX trader Mike Shirley. “It was strong enough to avoid further stoking recession concerns but soft enough to heighten expectations for future further interest rate cutting action from the Fed,” he said.

US Federal Reserve chair Jerome Powell’s comments at a “Fed Listens” event in Washington also weighed on the greenback. According to Powell, the US economy is in a good place but faces some risks

“Despite US labour data providing support for overall economic momentum, expectations for cuts at the October FOMC meeting were little changed as Fed Chair Powell acknowledged that the US economy faced risks,” said ANZ FX/rates strategist Sandeep Parekh.

Looking ahead, the Federal Reserve will deliver the minutes of its September meeting on Wednesday in the US. Also, Powell is due to speak at the National Association of Business Economics Annual Meeting on Tuesday in the US.

The market will be looking for clues regarding the path forward for rates, said TD Securities. “The market is now priced-in for an October cut on the heels of deteriorating data and will be looking for confirmation by Powell,” it said.

Another key focus over the week will be the resumption of trade talks between the US and China. Chinese negotiators, including vice premier Liu He, are expected to hold face-to-face talks with US officials this week in Washington.

The New Zealand dollar was trading at 93.27 Australian cents from 93.29, at 67.42 yen from 67.55, at 4.5088 Chinese yuan from 4.5145, at 57.46 euro cents from 57.53 cents and at 51.29 British pence from 51.24.

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