Dollar heads for 0.6% gain this week as US jobs report awaited; RBNZ looms

The New Zealand dollar is heading for a 0.6% gain this week as investors wait for US job figures to gauge whether the Federal Reserve will hike interest rates this year, before next week's local monetary policy review.

The kiwi rose to 71.40USc at 5pm in Wellington from 71USc on Friday in New York last week. It traded at 71.14USc at 8am, and 71.30USc yesterday. The trade-weighted index was little changed at 74.69 from 74.73 last week, and up from 74.48 yesterday.

Economists are picking the US added 225,000 jobs last month, before the release of the May non-farm payrolls report on Friday in Washington. Employment growth in the world's biggest economy has been relatively robust through a slow first quarter, though wage growth has been slow in a global environment of low inflation. The US labour market remains a key piece of data for analysts when trying to gauge whether the Fed will shift away from running its policy of a zero interest rate, and chairwoman Janet Yellen last month indicated the world's biggest central bank will probably start tightening policy this year.

"Markets are relatively comfortable taking the Fed at their data-dependent word, and the information we'll receive tonight is fairly important on the data dependent side of things," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "The market has expected 230,000 jobs, which is relatively strong and should support the US dollar and keep US dollar bills in the ascendency."

Investors will turn their attention to the Asia-Pacific next week with the Reserve Bank's policy review on Thursday. Traders are pricing in a 44% chance governor Graeme Wheeler will cut the 3.5% official cash rate as inflation continues to come in below expectations, and as another weak GlobalDairyTrade auction this week puts pressure on dairy prices, the nation's biggest commodity export.

New Zealand's two-year swap rate slipped to 3.05% at 5pm in Wellington from 3.36% yesterday, and the 10-year swap rate decreased to 4.06% from 4.08%.

Other data investors will be watching include New Zealand's first-quarter manufacturing, May property values and May electronic card spending, Australian employment figures, a speech by Reserve Bank of Australia governor Glenn Stevens and a glut of Chinese reports covering inflation, retail spending, investment, and trade.

The kiwi gained to 92.67Ac  from 92.20Ac yesterday and rose to 4.4319 Chinese yuan from 4.4203 yuan.

The local currency advanced to 63.65 euro cents from 63.28 cents after the International Monetary Fund agreed to delay a scheduled repayment of a loan by Greece, and was little changed at 46.46 British pence from 46.52p after the Bank of England yesterday kept policy unchanged.

The kiwi increased to 88.89 yen at 5pm in Wellington from 88.75 yen yesterday.

(BusinessDesk), 2016.