NZ dollar little changed as markets digest US jobs report

Monday 10th February 2014

The New Zealand dollar was little changed as investors mulled the significance of a weaker-than-expected US jobs report on Friday ahead of Federal Reserve chair Janet Yellen's inaugural testimony in front of policymakers this week.

The kiwi traded at 82.75 US cents at 5pm in Wellington from 82.83 cents at 8am and 82.90 cents at the close of trading in New York on Friday. The trade-weighted index was 78.05 from 78.16 on Friday in New York.

Traders will be watching Yellen's testimony for any clues on the pace of the Fed's winding back of stimulus after US non-farm payrolls showed the world's biggest economy added 113,000 jobs last month, compared to the 185,000 expected. That followed a weak December month, which was affected by the harsh winter conditions, and analysts are still trying to interpret the data.

"The payrolls report was mixed enough to confuse a lot of people - there's a lot of debate about whether it was neutral or weak," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "Given that the market doesn't know which way to go, the kiwi's gone sideways."

Westpac's Speizer said the currency may trade between 82 US cents and 84 cents this week, with the kiwi unlikely to shift out of its recent range until the Reserve Bank's next monetary policy statement in March, when the central bank is expected to start raising rates.

"Until then it could be quite dull for the kiwi," he said.

The local currency may trade between 80.40 US cents and 84.30 cents this week, according to a BusinessDesk survey of 11 traders and strategists. Seven predict the kiwi will rise this week, while three expect it to remain largely unchanged and one expects a drop.

New Zealand property values rose at a slower annual pace in January than in December, according to Quotable Value figures today. The state-owned valuer said restrictions on high loan-to-value ratio home lending and the prospect of looming rate hikes may have sapped some demand from the market.

The kiwi was little changed at 92.53 Australian cents at 5pm in Wellington from 92.48 cents on Friday in New York ahead of tomorrow's NAB business confidence survey, and Australian employment data later in the week.

The local currency slipped to 84.72 yen from 84.91 yen last week, and traded at 60.73 euro cents from 60.83 cents. It edged down to 50.43 British pence from 50.54 pence last week.

BusinessDesk.co.nz

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