NZ dollar slips as investors continue to digest US jobs data; RBNZ's stability report looms

Tuesday 10th November 2015

The New Zealand dollar slipped as investors continued to weigh up last week's strong US employment report and its impact on the track for US interest rates, and look ahead of tomorrow's release of the Reserve Bank's financial stability report.

The kiwi traded at 65.29 US cents at 5pm in Wellington from 65.33 cents at 8am, down from 65.59 cents yesterday. The trade-weighted index declined to 71.35 from 71.66 yesterday.

Traders are still assessing the ramifications of last week's strong US payrolls report, which is seen as firming up the chance the Federal Reserve will raise interest rates next month and boosting demand for the greenback. A downgrade of global growth by the Organisation for Economic Cooperation and Development also weighed on commodity-linked currencies, such as the kiwi.

"After the big moves on Friday, the consolidation period is clearly in effect and we also have a US holiday pending this week," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington. "It's a fairly tight trading range for the kiwi dollar with resistance at 65.60 (US cents) and support in the near-term at 65 - we're just in a consolidation phase awaiting further data."

The Reserve Bank of New Zealand releases its six-monthly financial stability report tomorrow, which gauges the strength of the nation's financial system. While the report doesn't focus on monetary policy, traders will be watching to see whether governor Graeme Wheeler tries to talk down the currency in either the report or his testimony to select committee later in the day.

The International Monetary Fund today released its preliminary findings on New Zealand, saying the government's balance sheet is strong enough to let it fund some infrastructure spending to lean against the slowing economy.

Meantime, Real Estate Institute figures showed Auckland's housing market slowed in October, while government data showed a dip in retail spending on credit and debit cards last month.

New Zealand's two-year swap rate fell three basis points to 2.77 percent, and the 10-year swap rose 4 basis points to 3.65 percent.

The local currency dropped to 92.56 Australian cents from 92.94 cents yesterday after business confidence declined in the latest National Australia Bank survey.

The kiwi fell to 4.1530 Chinese yuan from 4.1706 yuan yesterday, and declined to 80.38 yen from 80.89 yen. It slipped to 60.74 euro cents from 60.92 cents, and decreased to 43.20 British pence from 43.52 pence yesterday.

BusinessDesk.co.nz

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