Kiwi hits five-week low against Australian dollar
The New Zealand dollar fell to a five-week low against its Australian counterpart as rising unemployment at home and stronger job prospects across the Tasman stoked talk the gap in interest rates will not narrow in the immediate future.
The kiwi fell to 81.57 US cents from 81.67 cents at 5pm in Wellington yesterday. It slid to 78.22 Australian cents, near the lowest since September 6, from 78.49 cents.
New Zealand's unemployment rate unexpectedly rose to 7.3% in the third quarter, while Australia added 10,700 jobs last month, beating expectations. A weak jobs market gives Reserve Bank governor Graeme Wheeler more scope to cut the official cash rate from a record low 2.5%, widening the gap with Australia's 3.25% rate.
"The employment figures were a bit of a shock and increase the odds of an interest rate cut in New Zealand," says Dan Bell, currency strategist at HiFX. Mr Wheeler is more likely, though, to try to talk rates down while there is still a prospect the RBA will actually cut rates, he says.
Stocks fell overnight, with the Standard & Poor's 500 Index down 0.8%, amid more gloom from Europe, where the central bank kept its key rate unchanged and said there are no signs of a pickup in economic growth.
Weak stocks mean "it's looking like more downside [for the kiwi] over the next 24 hours," Mr Bell says.
Figures from the Real Estate Institute, howver, show house sales jumped by almost a third in October from a year earlier and set a new record median house price of $380,000, suggesting there are still signs of life in the domestic economy even as the dole queue grows.
The trade-weighted index fell to 72.98 from 73.11 and the kiwi dropped to 64.74 yen from 65.13 yen. It traded at 63.97 euro cents from 63.99 cents and was at 51.05 British pence from 51.07 pence.