NZ dollar gains vs. Australian dollar as unemployment rises across the Tasman

The New Zealand dollar gained against its trans-Tasman counterpart after Australia's unemployment rate unexpectedly rose in January, in what's been a volatile data set in recent months.

The kiwi rose to 92.89 Australian cents at 5pm in Wellington from 92.39 cents yesterday. The local currency climbed to 66.58 US cents from 66.33 cents at 8am and 65.58 cents yesterday, joining a rally in risk-sensitive assets after their selldown so far this year.

The Australian dollar dropped after Bureau of Statistics figures showed the unemployment rate rose to 6 percent in January and employment fell by 7,900 jobs, turning around the biggest quarterly gain through the end of 2015.

"The Aussie jobs data was worse than expected," said Tim Kelleher, head of institutional FX sales at ASB Institutional in Auckland. The kiwi has been trading near the bottom of the range against its Australian counterpart, and "kicked up a little with the Aussie struggling a bit" after the data, he said.

The New Zealand and Canadian dollars benefited against the greenback as investor sentiment improved and stock markets rallied after the general pessimism that's dominated trading this year. The Chicago Board Options Exchange's Volatility Index, known as Wall Street's fear gauge, has come off a five-month high, while the Thomson Reuters/CoreCommodity CRB index, which measures a basket of raw material prices, has bounced from 12-year lows.

ASB's Kelleher said the kiwi dollar was still trading within recent ranges, and the gain was part of a short-cover rally which he anticipates will last until late February/early March.

"It'll be a choppy two or three weeks," he said. "We'll be reasonably rangey in the currency, but it's a long way from anywhere else and we're reasonably stable."

Government data today showed output prices received by producers fell 0.6 percent in 2015 while input prices producers pay fell 1.2 percent, while a bank survey reported consumer confidence was still above the long-term average in January.

New Zealand's two-year swap rate was unchanged at 2.51 percent at 5pm in Wellington, and 10-year swaps increased three basis points to 3.22 percent.

The kiwi gained to 4.3390 Chinese yuan from 4.2790 yuan yesterday, and rose to 75.86 yen from 74.56 yen. It climbed to 59.77 euro cents from 58.77 cents yesterday, and advanced to 46.55 British pence from 45.85 pence. The trade-weighted index increased to 72.34 from 71.47 yesterday.

(BusinessDesk)