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New Zealand dollar little changed ahead of US employment data

Thursday 1st April 2010

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The New Zealand dollar stayed in a very tight range ahead of tomorrow’s release of US employment data, which is expected to show the world’s largest economy added its most number of jobs since early 2007.  

US non-farm payrolls data may show America added 180,000 jobs last month, though a weaker ADP report, which measures private sector job growth, may have damped expectations of a big surge. Markets were subdued ahead of tomorrow’s data release, which comes when Wall Street will be closed for Easter, and quarter-end repositioning didn’t inject much volatility into trading. The kiwi may get pushed out of its 70 US cents to 71.50 cents range if the US employment data surprises due to light trading volumes through the Easter holiday.  

“The risk is that non-farm payrolls comes out when the markets are pretty thin – there’s potential for things to get tossed about,” said Chris Tennent-Brown, economist at Commonwealth Bank of Australia. The kiwi “seems to be holding pretty firm,” though tomorrow’s data could push it out of its recent ranges, he said.  

The kiwi was little changed at 70.94 US cents from 70.99 cents yesterday, and edged down to 65.98 on the trade-weighted index, or TWI, a measure of the currency against a basket of five trading partners, from 66.13. It rose to 66.31 yen from 66.16 yen yesterday, and slipped to 77.33 Australian cents from 77.49 cents. It declined to 52.50 euro cents from 52.79 cents, and dropped to 46.72 pence from 46.98 pence.  

Tennent-Brown said the currency may trade between 70.75 US cents and 71.25 cents today as it continues to wait on the American employment data. The next major focus for the currency will be the household labour force survey in May, which will show whether the economic recovery is creating jobs, he said.  

The next big event on the domestic calendar is the New Zealand Institute of Economic Research’s Quarterly Survey of Business Opinion on Tuesday, which is expected to show ongoing optimism about the future of the country’s economy.

Yesterday’s National Bank Business Outlook, which is a leading indicator to the QSBO, showed firms were still upbeat last month, though they weren’t investing enough capital into their businesses.  

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