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NZ dollar gains vs. Australian dollar after strong jobs data, Wheeler talks down cut

Wednesday 3rd February 2016

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The New Zealand dollar gained against its Australian counterpart as data indicated a stronger labour market and after Reserve Bank governor Graeme Wheeler talked down the chances of another interest rate cut.

The kiwi rose to 93.04 Australian cents at 5pm in Wellington from 92.14 cents yesterday. The local currency advanced to 65.37 US cents from 64.89 cents at 8am and 65.24 cents yesterday.

Government data today showed New Zealand's unemployment rate unexpectedly fell to near a seven-year low 5.3 percent, followed closely by Wheeler's first public speech repudiating the need for a knee-jerk reaction to the recent slump in international oil prices. The strong labour data and Wheeler's comments were seen as reducing the chance of a rate cut in New Zealand, a day after the Reserve Bank of Australia's policy review indicating an allowance for further reductions. 

"Wheeler's looking more stick and the RBA's looking less sticky," said Imre Speizer, senior market strategist at Westpac Banking Corp in Auckland. "The kiwi looks like it's going to be one of the out-performers." 

The employment data and RBNZ speech offset earlier pessimism from the latest GlobalDairyTrade event, which showed whole milk powder prices dropped 10.4 percent, more than expected. 

Reserve Bank assistant governor John McDermott will deliver a speech tomorrow on forward guidance, which will give the central bank the opportunity to send any signals to the market if it misinterpreted Wheeler's speech. 

New Zealand's two-year swap rate was unchanged at 2.6 percent at 5pm in Wellington and 10-year swaps dropped nine basis points to 3.3 percent, following the rally in bonds around the world. 

The local currency gained to 4.2996 Chinese yuan from 4.219 yuan yesterday after the Caixin services gauge indicated faster expansion than anticipated. 

The kiwi fell to 78.23 yen from 78.74 cents yesterday, and was little changed at 59.88 euro cents from 59.83 cents. The local currency edged up to 45.37 British pence from 45.25 pence yesterday. The trade-weighted index rose to 71.97 from 71.62. 

 

 

BusinessDesk.co.nz



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