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NZ dollar dips back below 69 US cents on strong US jobs data

Monday 4th February 2019

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The New Zealand dipped back below 69 US cents after a surge in January U.S. job growth helped support the greenback.

The kiwi was trading at 68.91 US cents at 8:00am in Wellington from 69.09 cents here last week and 68.96 cents in New York late Friday. The trade-weighted index was largely unchanged at 74.28 from 74.29 in New York.

A U.S. Labor Department report overnight Friday showed nonfarm payrolls jumped by 304,000 jobs last month, the largest gain since February 2018 and beating economists’ expectations for an increase of 165,000. The jobs data, coupled with stronger-than-expected ISM manufacturing activity numbers for January, helped allay fears of an economic slowdown in the US.

"Solid January non-farm payrolls and a jump in Institute of Supply Management manufacturing new orders indicated strong momentum in US growth," said ANZ Bank FX/rates strategist Sandeep Parekh,

Risk appetite, however, was dented by a weaker-than-expected quarterly sales forecast from, which saw the stock fall 5.4 percent.  

Parekh noted opinions are divided on whether the US Federal Reserve was right to "steer in a dovish direction last week."  The kiwi jumped to a six-week high last week after the US Federal Reserve said it will be patient when it comes to any future interest rates, comments which weighed sharply on the greenback.

Parekh said the US dataflow remains "pretty good on the whole," which would imply the Fed's main concerns are driven by slowing overseas growth, expectations of a moderation in US growth and the potential for a resurgence in financial market volatility.

Looking ahead, he said New Zealand's jobs data - due Thursday - will be a focus and could see the kiwi test the upside once more. Until then he expects it to trade sideways with support at 68.70 US cents and resistance at 69.60 US cents. 

On the day, investors will be watching for domestic building consents data and the Australian Melbourne Institute Inflation data, building approvals and job ads.

The kiwi traded at 95.09 Australian cents from 95.27 late Friday in New York  and at 4.6463 Chinese yuan from 4.6571 yuan. The local currency traded at 75.45 versus 75.62 in New York and at 52.70 British pence from 52.77 pence. It fell to 60.10 euro cents from 60.29 euro cents.


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