Kiwi holds near 11-month low as Chinese data, US jobs report weigh

The New Zealand dollar held near an 11-month low after weak Chinese data eroded demand for the local currency and a strong US jobs report spurred support for the greenback.

The kiwi traded at 78.30 US cents at 5pm in Wellington from 78.37 cents at 8am, down from 78.85 cents on Friday in New York. The trade-weighted index dropped to 73.52 from 73.70 last week.

Chinese manufacturing and trade figures released at the weekend were weaker than expected, sapping demand for the Australasian currencies, with Australia and New Zealand increasingly dependent on the worlds' second biggest economy to buy their exports.

That came after US data showed stronger jobs growth than forecast, fuelling speculation the Federal Reserve will start unwinding its $US85 billion a month asset purchase programme as early as this year.

"The kiwi's getting sold right across the board, with offshore events driving the bus," says Michael Johnston, a senior trader at HiFX in Auckland. "The Chinese data was significant, and we may see follow-through selling on that tonight, which would probably push the kiwi a little lower."

Figures today showed New Zealand property values rose at an annual pace of 7.1 percent in the year ended May 31, matching the annual pace at the end of April.

The deterioration in the currency will start making the Reserve Bank's job easier, which has had to juggle conflicting tensions between the high kiwi and rising property prices. Governor Graeme Wheeler is expected to keep the official cash rate at 2.5 percent on Thursday and traders will be looking for any change in his view on the kiwi.

Mr Johnston says the central bank is probably likely to use macro-prudential tools to try and cool the housing market before hiking interest rates.

"It will be interesting to see what they say about the currency" on Thursday.

The kiwi rose to 83.19 Australian cents at 5pm in Wellington from 83 cents on Friday in New York and gained to 77.04 yen from 76.60 yen. It slid to 59.41 euro cents from 59.62 cents and fell to 50.41 British pence from 50.67 pence.

(BusinessDesk)