Sharechat Logo

NZ dollar gains vs Aussie after weak Australian jobs data, RBNZ decision

Thursday 22nd March 2018

Text too small?

The New Zealand dollar gained against its Australian counterpart after jobs data across the Tasman was weaker than expected, adding to the view the RBA - like the New Zealand central bank today - won't be lifting rates anytime soon.

The New Zealand dollar traded at 93.40 Australian cents as at 5pm in Wellington from 93.05 Australian cents as at 8am and 93.29 Australian cents yesterday.  It rose to 72.35 US cents from  71.78 cents late yesterday, in the face of US dollar weakness after the US Federal Reserve hiked interest rates as expected but only signaled two more increases this year. 

The kiwi got a lift when figures from the Australian Bureau of Statistics showed 17,500 net new jobs were added in February versus forecasts for 20,000. The unemployment rate lifted to 5.6 percent from 5.5 percent in January. Economists had expected 5.5 percent. 

"The weaker Aussie jobs number led people to buy kiwi and that's pushed it slightly higher on the day," said Ross Weston, a senior trader at Kiwibank.  "There were some forecasts that were a lot higher than the 20,000. It was mildly weaker and the market was geared up for something bigger, so it's just a bit of an unwind," he said. 

Economists said the Aussie jobs data points to ongoing tepid inflation and means the Reserve Bank of Australia is unlikely to lift rates in the immediate future. "Australia does not have a problem creating jobs, as employment continued to grow at its fastest rate in a decade in February. But there is still a lot of slack in the market that will need to be used up before wage growth rises significantly," said Paul Dales, chief Australia and New Zealand economist for Capital Economics. 

The kiwi didn't react when Acting Reserve Bank governor Grant Spencer kept the official cash rate unchanged at 1.75 percent today and continued to signal that rates will remain on hold due to the lack of inflationary pressure.  Spencer "basically just handed the ball over to Adrian Orr," said Weston. Orr is due to take the helm of the RBNZ next Tuesday and investors are keen to see the new policy targets agreement (PTA) that is expected to change the central bank’s long-held exclusive focus on inflation targeting to include an employment objective as well as what tone Orr will set.

The trade-weighted index rose to 74.24 from 73.97.

The local currency traded at 76.45 yen from 76.42 yen and at 51.08 British pence from 51.23 pence. The kiwi traded at 58.51 euro cents from 58.53 cents and rose to 4.5716 yuan from 4.5460 yuan.

New Zealand's two-year swap rate eased 1 basis point to 2.23 percent and the 10-year swap rate fell 4 basis points to 3.14 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:

Terra Vitae says poor harvest to hit sales, earnings
Weak services sector growth raises concerns about NZ economic slowdown
National sticks to bob-each-way on US-China relations in new policy paper
Kiwi Property lifts annual profit 15% as valuations rise
Kiwi Property lifts annual profit 15% as valuations rise
Scales signals earnings growth from reshaped business
Steel & Tube cuts earnings outlook on margin squeeze, inventory restatement
Bankers' Assn says RBNZ bank capital proposals would hurt the economy
20th May 2019 Morning Report
NZD slightly weaker against Aussie after Liberals' surprise victory

IRG See IRG research reports