NZ dollar up against Aussie, steady against USD ahead of payrolls

Friday 2nd June 2017

The New Zealand dollar continued to gain slightly against the Aussie, despite an improvement in iron ore prices, and held steady against the greenback ahead of key US jobs data.

The kiwi was at 70.76 US cents at 5 pm from 70.63 cents at 8 am and 70.75 cents late yesterday. It traded at 95.70 Australian cents from 95.60 cents late yesterday.

Tim Kelleher, head of institutional foreign exchange sales at ASB Bank, said the market had been "washing around" ahead of US jobs data later in the global trading day. The "non-farm payrolls data will be the focus of it all. I would imagine it would be a very good number," he said.

Overnight in the US, the ADP employment survey showed 253,000 jobs added in May, compared to a forecast 180,000, boosting speculation the official non-farm payrolls data tonight will also be strong.

A better-than-expected number will give the US dollar a lift and will weigh on both the kiwi and the Aussie, said Kelleher. He noted, however, New Zealand dollar trading is likely to be thin given that Monday is a public holiday.

He said the Aussie recovered slightly on the day because of an improvement in iron ore but noted it barely budged against the kiwi. The most-traded iron-ore contract on China's Dalian Commodity Exchange was up 1.2 percent, after shedding about 15 percent over the past six sessions. The kiwi, however, remained around a 4-month high against the Aussie on optimism the local economic outlook favours the kiwi over its trans-Tasman counterpart.

Looking ahead, Kelleher said the main focus will the US Federal Reserve's mid-June policy meeting, with the market expecting it to raise short-term interest rates. He said next week's gross domestic product data across the Tasman as well as the Reserve Bank of Australia's rate decision will be closely watched.

The trade-weighted index was at 76.53 from 76.40. The kiwi traded at 63.07 euro cents from 62.91 cents late yesterday and at 54.95 British pence from 54.97 pence. It rose to 4.8218 yuan from 4.8028 yuan and traded at 78.96 yen from 78.50 yen. The yen lost ground in Asia ahead of the US jobs data.

New Zealand's two-year swap rate rose 1 basis point to 2.20 percent and the 10-year swaps rose 3 basis points to 3.19 percent.

(BusinessDesk)

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