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NZ dollar becalmed as traders eye signs of slowing global growth

Monday 11th March 2019

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The New Zealand dollar was little changed, sidelined as markets await other data to assess whether Friday’s sharply lower-than-expect US jobs numbers were an aberration or part of a broader slowdown there and in global economic activity.

The kiwi was trading at 67.97 US cents at 5pm in Wellington from 67.99 at 8am; the trade-weighted index was unchanged at 73.97 points.

The US economy added just 20,000 new jobs in February compared with expectations of 185,000 and well down from the bumper 311,000 jobs created in January.

“The headline number was no good, but there were past revisions that were positive and the unemployment rate improved and the wages growth number went up,” says Mitchell McIntyre, a trader at Xe.

The January jobs gain in the US was revised up from 304,000, while average hourly earnings in February were 3.4 percent higher than a year earlier. The unemployment rate also fell to 3.8 percent.

“The US dollar did weaken gently into the end of last week and the kiwi has been resilient,” McIntyre says.

Investors are also looking at developments in Britain’s Brexit debate as the March 29 deadline to leave the European Union looms with no exit deal in sight yet, he says.

No deal could result in a “hard Brexit,” which most observers have said would be disastrous, but it’s also possible the deadline could be postponed.

Investors will also be eyeing data in the US, such as retail sales overnight, CPI on Tuesday and new home sales figures on Thursday, for further guidance on how the US economy is travelling.

The market took stronger-than-expected local data on electronic card spending in its stride.

Other indicators due this week are all 'second tier' data that’s unlikely to move the market.

They include ANZ’s Truckometer on Tuesday, which measures truck and other traffic movements to gauge the economic temperature, housing figures from the Real Estate Institute on Thursday and migration numbers on Friday.

The New Zealand currency was trading at 96.58 Australian cents from 96.52, at 52.39 British pence from 52.31, at 60.51 euro cents from 60.47, at 75.51 yen from 75.54 and at 4.5686 Chinese yuan from 4.5690.

The two-year swap rate ended the day at 1.8266 percent from 1.8135 on Friday; the 10-year rate was at 2.3550 percent from 2.3725.

The 10-year swap rate has fallen 23.5 percent since mid-November as central banks around the world have become more dovish and concerned that global growth may be slowing. 


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