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NZ dollar falls against Aussie after jobs data there

Thursday 17th October 2019

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The New Zealand dollar fell against the Australian dollar after better-than-expected jobs data across the Tasman.

The kiwi was trading at 92.78 Australian cents at 5pm from 92.93 cents at 7:50am after hitting an intraday low at 92.60 cents. It was largely unchanged against the US dollar, at 62.96 cents from 62.86 cents this morning. The trade-weighted index was at 69.93 points from 69.86.

"The kiwi dollar has been a bit of a bystander today – the focus of the day was the Australian jobs data," says Michael Johnston, a dealer at XE.

The Australian job numbers came in at a net 14,700 new jobs created in September. While that was marginally below the consensus forecast of 15,000, there were 26,200 new full-time jobs and 11,400 fewer part-time jobs. The August figures were also revised upwards.

Despite yesterday's stronger than expected New Zealand inflation data, the market is still expecting the Reserve Bank of New Zealand to cut its official cash rate at its next meeting on Nov. 13, Johnston says.

However, expectations that the Reserve Bank of Australia will cut at its next meeting on Nov. 3 have dwindled and the market is now pricing in just a 20 percent chance of that, he says.

Marcel Thieliant, an economist at Capital Economics, says the RBA "will breathe a sigh of relief after the employment rate decline in September."

The Australian rate eased to 5.2 percent from 5.3 percent in August.

"But we think it won't be long before unemployment starts to rise again, forcing the RBA to provide additional stimulus," Thieliant says.

XE's Johnston says the market continues to watch developments in the US-China trade war after optimism about a partial deal waned somewhat.

That was after the realisation that there was little substance behind US President Donald Trump's declaration on the weekend that he had sealed "by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country."  

BNZ strategist Jason Wong says last week's trade talks may well curb any further ramp-up in punitive tariffs.

"However, any rollback of existing tariffs and progress on thornier issues looks unlikely at this stage. A truce that sees the maintenance of the status quo might be enough to prevent further yuan weakness which hitherto has been instrumental in dragging down the value of the NZD," Wong says.

The New Zealand dollar was trading at 49.10 British pence from 48.99,  at 56.82 euro cents from 56.76, at 68.48 yen from 68.36, and at 4.4678 Chinese yuan from 4.4898.

The two-year swap rate edged up to a bid price of 0.9035 percent from 0.8814 yesterday. The 10-year swaps rose to 1.3025 percent from 1.2800.


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