Sharechat Logo

NZ dollar range bound ahead of US jobs data

Friday 8th March 2019

Text too small?

The New Zealand dollar was slightly higher but stuck to a very tight range ahead of US jobs data later in the global trading day.

The kiwi was trading unchanged at 67.58 US cents at 5pm in Wellington compared with 8am. It fell around 0.6 percent percent over the week. The trade weighted index was at 73.60 points from 73.55.

"The kiwi really struggled in the early hours and that was really just a US dollar strength story," says Mike Shirley, senior dealer at Kiwibank.  However, it bounced off a key technical support level of 67.45 US cents and got further impetus from some positive New Zealand data.

New Zealand's building activity rose more than expected in the December quarter as work on non-residential buildings drove volume growth. That, coupled with a better-than-expected economic survey of manufacturing meant ASB Bank revised its preliminary fourth quarter GDP forecast to 0.4 percent quarter-on-quarter versus a prior forecast of 0.2 percent.

TD Securities chief Asia-Pacific macro strategist Annette Beacher said markets are two-thirds priced for a Reserve Bank of New Zealand rate cut by November but "after adding up the building blocks for the December quarter GDP, that pricing appears "increasingly less justified."

Ever since the slight bounce off support and the data, "we have been in a mild recovery mode," said Shirley.  He added, however, the trading range was very tight. "The market is really just drifting along without its hand on the wheel, waiting for the next thing and that is probably going to be that non-farm payrolls number overnight," he said.

US non-farm payrolls likely increased by about 180,000 in February versus 304,000 in the prior month, according to economists surveyed by Bloomberg. The unemployment rate is tipped to come in at 3.9 percent.

Given the low unemployment rate, any sign of wage inflation could spur a market reaction, said Shirley.  "Good employees are harder to find, you have to pay more to get them, so it increases wages, which has an on-flow effect for inflation, which maybe then spurs the Federal Reserve to do something," he said. 

The kiwi was trading at 60.34 euro cents from 60.24 at 8am. It was at 51.61 British pence from 51.60, 75.27 yen from 75.38  and at 4.5398 Chinese yuan from  4.5375. It was at at 96.35 Australian cents from 96.20.

The two-year swap rate ended the day at 1.8135 percent from 1.8294 on Thursday and the 10-year was at 2.3725 percent from 2.4150.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
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:

NZD headed for 0.6% weekly gain against greenback
PREVIEW: RBNZ tipped to keep cash rate at 1.75%, reiterate next move could be up or down
Sky TV hires Deloitte partner as fill-in CFO
Vector fined $3.6 mln in industry first
SIS Group to partner with Platform 4 Group
Dry weather cutting dairy production, boosting power costs
22nd March 2019 Morning Report
NZ dollar dips back below 69 US cents, focus shifting to RBNZ
Top Energy's geothermal expansion to cut lines charges
MARKET CLOSE: NZ shares rise on Fed restraint, local GDP growth; Auckland Airport slides

IRG See IRG research reports