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NZ dollar touches 8-year high against Aussie dollar

The New Zealand dollar touched an eight-year against its trans-Tasman counterpart ahead of Australia employment figures, which will give investors another update on how that economy is tracking.

The kiwi rose as high as 93.96 Australian cents, the highest since December 2005, and traded at 93.51 cents at 8am in Wellington from 93.40 cents yesterday. The local currency was little changed at 83.32 US cents from 83.36 cents yesterday.

Australia's unemployment rate was unchanged at 5.8 percent as 7,500 jobs were added in December, according to a Reuters survey of economists. Investors are gauging the impact of the Reserve Bank of Australia's rate cuts last year as the nation's economy slows down amid dwindling demand for its hard commodity exports. That's at odds with the gathering momentum in New Zealand, and seen the kiwi become a favourite among investors.

"If we get a stronger Australian jobs number, the Aussie could definitely spike back up again," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland, referring to the Australian dollar colloquially.

The kiwi has failed to break above 94 Australian cents twice this week, and Kelleher said he expects traders to wait until the Reserve Bank of New Zealand policy meeting at the end of the month if they decide to take it lower.

The Dollar Index, a measure of the greenback against a basket of currencies, rose to 81.04 from 80.85 yesterday as US manufacturing figures the Federal Reserve's Beige Book painted a better picture of the world's biggest economy. Traders were spooked by a weak December employment reading last week, which spurred fears the Fed might not pull back on its stimulus programme as quickly as anticipated.

ASB's Kelleher said the kiwi still trading in its range of between 81 US cents and 84 cents, and will probably find support at 83.50 cents today.

"The kiwi's still outperforming on some of the cross - the kiwi/sterling, kiwi/euro, kiwi/yen - and it's the cross that's holding it up," Kelleher said.

The local currency edged up to 97.18 yen at 8apm in Wellington from 87 yen yesterday, and was little changed at 61.29 euro cents from 61.13 cents yesterday. It increased to 50.92 British pence from 50.76 pence yesterday. The trade-weighted index was little changed at 78.94 from 78.87 yesterday.

(BusinessDesk)

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