NZ dollar little changed ahead of RBNZ review, Australian jobs data

Thursday 14th March 2013

The New Zealand dollar was little changed ahead of the Reserve Bank's statement as traders ponder its assessment of the impact of drought, a high kiwi dollar and a hot Auckland property market on the outlook for the economy.

The local currency traded at 82.53 US cents from 82.50 cents at 5pm in Wellington yesterday. The trade-weighted index rose to 76.17 from 75.95.

Reserve Bank governor Graeme Wheeler is expected to keep the official cash rate at 2.5 percent though his forecasts will need to be revised, as the TWI is well above the 73.1 level he saw it averaging for the first quarter in his December MPS. Drought is likely to slow economic growth while a high kiwi keeps imported inflation in check, leaving housing as the economy's hot spot.

"Leaving aside the Auckland property market, there's the drought and ongoing challenges we're facing," said Dan Bell, senior trader at HiFX. "There's no reason for the governor to be hawkish in this statement."

The kiwi may trade in a range of 81.80 US cents to 82.80 cents today and could drop to 81 cents if it breaks its initial support level, Bell said.

Australian employment figures due out today are expected to show that economy added 9,000 jobs last month while the unemployment rate climbed to 5.5 percent from 5.4 percent.

If the numbers point to a stronger labour market across the Tasman, "a lot of investors will be questioning whether we will see any rate cuts from the Reserve Bank of Australia this year," Bell said.

The New Zealand dollar edged up to 80.04 Australian cents from 79.91 cents and climbed to 79.22 yen from 78.91 yen. The kiwi gained to 63.68 euro cents from 63.26 cents and traded at 55.29 British pence from 55.21 pence.

BusinessDesk.co.nz

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