Kiwi hits two-month low as trans-Tasman labour markets diverge
The New Zealand dollar sank to a two-month low against its Australian counterpart after official figures painted a rosier jobs market across the Tasman as local unemployment rises to a 13-year high.
The kiwi fell to 78.46 Australian cents at 5pm in Wellington, the lowest since September 13, from 79.07 cents yesterday. It dropped to 81.66 US cents from 82.57 cents at 8am and 82.54 cents yesterday.
New Zealand's unemployment unexpectedly rose half a percentage point to 7.3% in the September quarter, the highest rate of joblessness since 1999, Statistics New Zealand says.
That dashed expectations for a slight easing in the headline rate to 6.7%. Across the Tasman, Australia added 10,700 jobs last month, beating expectations and underlining the divide between the neighbouring nations.
"New Zealand's labour market report was terrible – there were no silver linings anywhere," says Joe Capurso, currency strategist at Commonwealth Bank of Australia in Sydney. "It raises the risk the RBNZ might have to do something."
The weak local labour figures come as international investors prepare for US Federal policymakers to figure out how to get around the $US600 billion fiscal cliff of tax hikes and spending cuts.
Stocks on Wall Street plunged after President Barack Obama saw off rival Mitt Romney to keep the White House for a further four years.
"With markets increasingly focused on the fiscal cliff it's going to be bad for equities and for the Aussie and kiwi," Mr Capurso says.
The divergent trans-Tasman labour markets have not prompted CBA to change its view on the kiwi appreciating against the Australian dollar, with New Zealand's currency typically outperforming on the cross-rate during times of global uncertainty.
The kiwi fell to 64.04 euro cents from 64.31 cents and declined to 51.12 British pence from 51.5 pence. It slid to 65.20 yen from 66.17 yen yesterday, and the trade-weighted index dropped to 73.17 from 73.77.