Kiwi falls against Aussie after unexpected jobs data

BUSINESSDESK: The kiwi fell against the Australian dollar in local trading after data showed more people found work across the Tasman than expected in September.

The New Zealand dollar fell to 79.53 Australian cents from 79.84 cents yesterday at 5pm and slid to 81.80 US cents from 81.64 cents. The trade weighted index was unchanged at 73.01.

In Australia, New Zealand's biggest export market, the number of people employed rose by 14,500, the biggest increase since May, the statistics bureau in Sydney said. The jobless rate increased by 5.4%, the highest since April 2010.

"The kiwi-Aussie cross has fallen out of bed from recent highs," says Dan Bell, currency strategist at HiFX. "The Australian dollar has been the big mover with the market focused on the jobs growth number, which was better than expected."

The unexpected data has pared bets the Reserve Bank of Australia will reduce its benchmark interest rate by another quarter of a percentage point next month.

Last week it cut interest rates 25 basis points to 3.25%, citing weaker commodity prices in the a global market where the outlook for the economic growth "has softened".

"The New Zealand dollar has had a strong run following the RBA's rate cut and the employment data has given it a short-term boost but it won't change what the RBA has to say," Mr Bell says.

The kiwi rose to 63.55 euro cents from 63.33 cents at 8am and 63.46 cents at 5pm yesterday.

Standard & Poor's lowered Spain's debt rating by two levels to BBB- from BBB+ and assigned a negative outlook for its debt. That has prompted further speculation the indebted nation will be forced to ask for a bailout.

"It could prompt a risk rally," Mr Bell says. "If we don't see the bailout requested it's negative news for Europe, which should weigh on sentiment."

The local currency was little changed after New Zealand's manufacturing activity shrank for a fourth month in September, as new orders fell to the lowest level since May. The BNZ-BusinessNZ performance of manufacturing index (PMI) rose to 48.2 last month from 47.2 in August, indicating the pace of contraction is slowing.

Today's manufacturing survey came as New Zealand's consumer confidence fell to 110.5 October from 111.9, with Kiwis remaining cautious about spending money and put more aside for a rainy day.

New Zealand food prices fell 0.9 in September, snapping four months of gains, reflecting lower prices for groceries and fruit and vegetables. Grocery prices fell 1.6%, fruit and vegetables eased 2.2%, while non-alcoholic beverages decreased 0.5%.

There is no significant data set for release tomorrow.

The kiwi was largely unchanged at 51.05 British pence from 51.04 pence and little changed at 63.83 yen from 63.90 yen.