NZ dollar heads for 0.7% weekly decline, dragged lower by weak Aussie

The New Zealand dollar was heading for a 0.7 percent weekly decline, after being dragged lower a weaker Australian dollar, as traders await US payrolls data tonight.

The kiwi dollar was trading at 68.34 US cents as at 5pm in Wellington from 68.60 cents late yesterday and from 68.85 cents a week ago. It was at 90.93 Australian cents from 90.85 cents late yesterday as the Aussie dollar traded near a six-month low at 75.13 US cents.

The Aussie was weighed by soft trade data for October, weak iron ore markets and a firmer US dollar. The greenback has strengthened on optimism about the progress of US tax reforms, reports US President Donald Trump is confident that he can strike a deal to lift the US debt ceiling and ahead of the payrolls data with investors looking for 200,000 new jobs in November.

Sheldon Slabbert, a trader at CMC Markets, said markets may be disappointed in the payrolls figures. While the jobs numbers might look healthy, a lack of wage growth "will probably see the US dollar sell-off," he said.

He noted, however, while the kiwi may open higher Monday, it will continue to struggle as the US Federal Reserve lifts rates while the Reserve Bank of New Zealand remains firmly on hold, there is evidence of a slowdown in housing, confidence is waning and the dairy sector is coming under pressure.

Fonterra Cooperative Group cut its forecast milk payout as expected this week, following declines in global dairy prices in four of the last five auctions and data this week showed New Zealand commodity prices slipped further in November, with dairy prices leading the pack lower.

Domestically, investors will focused on next week's half-year economic and fiscal update and Budget policy statement from the government, in particular as it outlines funding plans for areas such as education, healthcare, housing and water quality while aiming to maintain healthy economic growth.

The kiwi traded at 77.42 yen from 77.09 yen and fell to 50.70 British pence from 51.25 pence and was largely unchanged at 58.06 euro cents from 58.09 cents. It fell to 4.5223 yuan from 4.5367 yuan while the trade-weighted index declined to 72.44 from 72.53 yesterday.

New Zealand's two-year swap rate was unchanged at 2.14 while the 10-year swap rate was unchanged at 3.07 percent.

(BusinessDesk)