NZ dollar declines as greenback strengthens on upbeat US jobs data

Monday 9th February 2015

The New Zealand dollar declined as the greenback strengthened after a key measure of the US labour market printed better than expected, bolstering optimism that a US economic recovery will lead to higher interest rates this year.

The kiwi fell to 73.37 US cents at 8am in Wellington, from 73.57 cents at the New York close and 74.20 cents at 5pm in Wellington on Friday.The trade weighted index slipped to 76.14 from 76.42 on Thursday, ahead of the Waitangi Day national holiday on Friday.

The US dollar index, which measures the greenback against a basket of currencies, advanced after US non-farm payrolls increased by 257,000 last month, ahead of the 234,000 gain expected in a Reuters poll of economists. The US had its largest three month increase in jobs since 1997 after data for the previous two months was revised higher, and wages also increased in January, stoking expectations a strengthening US economy will prompt the Federal Reserve to hike interest rates by mid year.

"The unambiguously strong non-farm payrolls report drove a broad-based strengthening in the US dollar," ANZ Bank New Zealand senior economist Mark Smith said in a note. "While there is still some way to go, the data supports the view that labour market conditions are converging towards the Fed’s full employment mandate and on its current trajectory will encourage the Fed to start rate hikes from mid 2015."

The kiwi is likely to trade between 73 US cents and 74.50 cents today, ANZ said.

The New Zealand dollar fell to 94.40 Australian cents from 94.79 cents on Friday ahead of a lunchtime speech by Australian Reserve Bank governor Glenn Stevens at the Bank of China RMB Clearing Bank Launch Ceremony in Sydney.

The local currency declined to 4.5809 yuan from 4.6305 yuan on Friday after trade data published at the weekend showed Chinese imports dropped 19.7 percent in January, compared with a 2.3 percent decline in the previous month, due to a crackdown on commodity financing. China is New Zealand's largest trading partner.

The kiwi weakened to 48.08 British pence from 48.40 pence on Friday, was little changed at 64.74 euro cents from 64.70 cents, and advanced to 87.34 yen from 87.04 yen.

BusinessDesk.co.nz

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