Dollar little changed, after falling with stronger US figures

The New Zealand dollar was little changed, having dropped yesterday on an unexpected rise in the jobless rate, while the US dollar benefited from stronger than expected jobs and manufacturing data.

The New Zealand dollar traded at 72.77USc as at 8:30 am in Wellington from 72.62USc. It fell from 73.31USc before the employment report. The trade-weighted index was at 79.31 from 79.20.

The kiwi declined yesterday after government figures showed the unemployment rate rose to 5.2% in the fourth quarter against expectations of a drop to 4.8%.

That became the focus rather than more positive measures such as the number of people in the workforce rate rising to a record 70.5%.

In the US, the Federal Reserve kept interest rates unchanged as expected while noting improving consumer and business sentiment, and a relatively benign unemployment rate of 4.7%, keeping intact market expectations of rate hikes this year.

"Economic data releases have been a key booster of currencies over the past 24 hours, with NZ labour market data driving the NZD lower, and strong releases driving the USD and GBP higher," BNZ currency strategist Jason Wong says.

"The Fed will want to keep its options open as it looks to raise rates three times this year. The messaging of a gradual tightening pace, dependent on upcoming data, should prevail."

Helping boost the prospects for the greenback were the ISM manufacturing report for January with a reading of 56 against expectations of 55, and the ADP private sector employment figures, which showed 246,000 jobs added in January from 153,000 in December.

In New Zealand, traders will be watching for a speech by Prime Minister Bill English to a Rotary Club in Auckland at lunchtime, after he named the date for the election as September 23 and says the economy will be a key focus of his campaign for re-election.

The kiwi edged up to 5.0084 yuan from 4.9939 yuan and gained to 67.54€c from 67.28€c. It fell to 57.49 British pence from 57.75 pence after the UK's Markit PMI manufacturing survey read at 55.9 as expected for January. The kiwi rose to 82.37 yen from 82.18 yen.

(BusinessDesk)