Sharechat Logo

NZ dollar falls after unexpected rise in unemployment in fourth quarter

Wednesday 1st February 2017

Text too small?

The New Zealand dollar fell after figures showed the jobless rate unexpectedly rose in the fourth quarter while wage inflation remained tepid, detracting from the case for Reserve Bank rate hikes starting this year.

The New Zealand dollar was trading at 72.62 US cents as at 5 pm in Wellington versus 73.31 cents at 8am and 72.86 cents yesterday.The trade-weighted index was at 79.20 from 79.64.

The kiwi, which began the day at a fresh 2 1/2-year high, lost ground after news New Zealand's unemployment rate rose to 5.2 percent in the three months ended Dec. 31 from a revised 4.9 percent in the September quarter, data from Statistics New Zealand showed. Economists had been expecting the unemployment rate to ease back to 4.8 percent.

"The unemployment rate rose more than anticipated and even though the data itself wasn't that bad when you dig into it, it was enough to stop the kiwi's ascent," said OMF private client manager Stuart Ive.  

While the unemployment rate rose, employment grew 0.8 percent in the quarter to 2.51 million, outpacing the 0.5 percent increase in the working-age population to 3.76 million. The participation rate hit an all-time high of 70.5 percent, as record migration continues. Still, other figures showed that the ordinary time private sector labour cost index increasing 0.4 percent in the quarter. 

Ive said the kiwi pushed below some key levels and continued to trickle lower in Asia.   He said the local dollar need to push back above 73 US cents and 96.50 against the Australian dollar to "indicate its still on track to go higher."  The kiwi traded at 96.10 Australian cents at 5 pm versus 96.29 late yesterday.

Looking ahead, he said markets are still keeping an eye on any more moves by US President Donald Trump but the main event is the statement from the US Federal Open Market Committee meeting. He expects the statement to largely repeat the December statement as "while it feels like a lifetime, Trump has only been office for 12 days and they are highly unlikely to react to anything (he's done)," he said.  

The kiwi was at 4.9939 yuan from 5.0111 yuan and at 67.28 euro cents from 68.11 cents. It traded at 57.75 British pence from 58.24  pence late Tuesday and at 82.18 yen from 82.73 yen

New Zealand's two-year swap rate fell 2 basis points to 2.38 percent while the 10-year swaps fell 2 basis points to 3.52 percent.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares up, led by Fisher & Paykel Healthcare, Ryman
NZ dollar heads for 0.1% weekly fall with jittery markets over weaker yuan
Xero quits developing in-house US payroll product, signs up with Gusto
Farming, horticultural groups seek flexibility in zero emissions plans
Hawaiki Submarine Cable begins commercial operations
Net migration falls in June, remains historically high, Stats NZ says
Commerce Commission files proceedings against Wilson Parking, seeks penalty
SeaDragon's funding transaction unfair but positives outweigh negatives, say independent advisers
Morningstar cuts earnings forecast for Z Energy but maintains hold rating
July 20th Morning Report

IRG See IRG research reports