NZ dollar pares gain as US jobs stoke greenback; Key sees kiwi at 80 US cents

Monday 8th November 2010

The New Zealand dollar pared some of last week’s gains after strong jobs growth in the US stoked investors’ demand for the greenback, while Prime Minister John Key said he expects the kiwi to go higher.

The Dollar Index, a measure of the US dollar against a basket of currencies, gained 0.8% to 76.59 after non-farm payrolls data beat expectations as America added 151,000 jobs last month. That came after the US Federal Reserve said it will print US$600 billion over the next eight months to reinvigorate a stalling recovery in the world’s biggest economy.

“There was a bout of respite for the US dollar after pretty solid non-farm payrolls figures added to the recent theme of a turnaround in US data,” said Mike Jones, strategist at Bank of New Zealand. The broad-based strength in the kiwi “suggests it’s on relatively sound footing” with upbeat commodity prices, widening interest rate spreads, and optimistic investors, he said.

The kiwi last week climbed as high as 79.70 US cents after local unemployment fell more than expected, adding to the improving climate in New Zealand’s economy. Prime Minister John Key, a former currency trader at Merrill Lynch, told TV One’s Breakfast programme today that he thinks the kiwi will “probably go a little bit higher” than 80 US cents.

The kiwi fell to 79.11 US cents from 79.25 cents on Friday in New York, and rose to 69.55 on the trade-weighted index of major trading partners’ currencies from 69.37. It slipped to 77.83 Australian cents from 78.09 cents last week, and gained to 64.36 yen from 64.03 yen. It increased to 56.39 euro cents from 55.86 cents last week, and was little changed at 48.88 pence from 48.85 pence after touching a 31-year-high 49.20 pence on Friday.

Jones said the currency may trade between 79 US cents and 79.75 cents today with local property data and the government accounts unlikely to shift the kiwi around after a hectic period last week. He predicts the kiwi will test 80 US cents this week, but doubts it will break through.

Businesswire.co.nz

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