Kiwi little changed as employment figures loom

BUSINESSDESK: The New Zealand dollar was little changed in local trading as markets prepare for employment figures to trickle out over the rest of the week, culminating in US payrolls on Friday.

The kiwi traded at 81.44 US cents at 5pm from 81.56 cents at 8am and 81.47 cents yesterday.

The trade-weighted index was unchanged at 72.35.

Investors are preparing for a slew of employment data over the coming days, with US ADP private payrolls and European jobs numbers on Wednesday in the Northern Hemisphere and New Zealand's household labour force survey figures tomorrow.

The focus on jobs comes as unemployment remains persistently high ahead of US non-farm payrolls on Friday, which is expected to show the world's biggest economy added 160,000 jobs last month.

New Zealand's unemployment rate is tipped to stay unchanged at 6.3% in the first three months of the year.

"The unemployment is always ripe for a surprise because it's an error-riddled series, and there may be something there," said Imre Speizer, market strategist at Westpac Banking.

"We're heading into the ninth week [of trading in a 2 UC cents band], which is the longest running narrow range since September 06", and the kiwi moved 3.5 US cents when it broke above that band, he said.

The kiwi dropped yesterday after the Reserve Bank of Australia unexpectedly cut the target cash rate 50 basis points to 3.75%, though it since recovered those losses.

"Your interest rate differentials are moving in the kiwi's favour," which stokes demand for New Zealand's currency, Mr Speizer said.

The currency shrugged off a decline in dairy prices achieved on Fonterra's GlobalDairyTrade platform.

The average winning dropped 2.4% to its lowest level since August 2009.

The ANZ Commodity Price index showed the price of locally produced raw materials fell to an 18-month low in April.

Mr Speizer said the next major local event will be the government's budget on May 24, where rating agencies will be looking for a credible fiscal plan with no new spending.

The kiwi slipped to 78.71 Australian cents from 78.82 cents yesterday, and gained to 65.46 yen from 65.08 yen.

It was little changed at 61.59 euro cents from 61.51 cents yesterday, and edged down to 50.16 pence from 50.23 pence.