NZ dollar extends decline ahead of key US job figures

The New Zealand dollar extended its decline, trading near a two-month low, as looming US employment data keep the prospect of a rate hike by the Federal Reserve at the front of investors' minds.

The kiwi fell to 71.48USc at 8am in Wellington from 71.67USc yesterday. The trade-weighted index was little changed at 76.46 from 76.44.

Economists predict the US added 172,000 jobs last month; non-farm payrolls data are being released in Washington today and investors will be watching the figures for whether the labour market in the world's biggest economy is healthy enough to warrant another rate hike later this year. Fed officials have been relatively upbeat about the outlook in the US and economic indicators earlier this week exceeded expectations, prompting some traders to view a hike in November as an outside chance. The yield on 10-year US Treasuries rose three basis points to 1.74 percent.

"Expectations for a decent report already appear high, and the US OIS (overnight index swap) market now prices almost an 80 percent chance of a December Fed hike," Bank of New Zealand market strategist Kymberly Martin said in a note. "A stellar report would likely be required to spur a further leg of US dollar strength."

The European Central Bank noted "increasing scarcity of some bonds" in the account of its last policy meeting, though didn't directly mention tapering its quantitative easing programme, which has been rumoured as being under consideration. The kiwi rose to 64.13 euro cents from 63.99 cents yesterday.

The British pound dropped to a 31-year low against the greenback as investors adjusted to the prospect of the UK's prioritising immigration curbs over staying in the European single market when it exits the European Union. The kiwi rose to 56.67 pence from 56.32 pence yesterday.

The kiwi was little changed at 94.30Ac from 94.22Ac yesterday and gained to ¥74.40 from ¥74.12. It fell to 4.7660 Chinese yuan from 4.7793 yuan yesterday.

(BusinessDesk)

Click the hamburger symbol top right of our homepage to access the Rich List 2016 and other sections.