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NZ dollar heads for 1.5% weekly fall vs. greenback as US employment figures loom

Paul McBeth
Sat, 08 Nov 2014

The New Zealand dollar is heading for a 1.5 percent weekly decline against the greenback ahead of US employment figures which are expected to show a strengthening labour market in the world's biggest economy, having touched a two-year low after headlines of a major earthquake off Papua New Guinea's Britain Island.

The kiwi fell as low as 76.62 US cents, the lowest since June 2012, and was trading at 76.65 cents at 5pm in Wellington from 77.80 cents on Friday in New York last week. It traded at 76.92 cents at 8am and 76.84 cents yesterday. The trade-weighted index traded at 76.33 from 76.25 yesterday, and is heading for a 0.5 percent weekly decline from 76.72 last week.

A BusinessDesk survey of 11 traders, strategists and brokers on Monday predicted the kiwi would probably trade between 76 US cents and 79.80 cents this week. Seven picked the kiwi to fall this week, while three expected it to rise and one said it would remain at current levels.

The US added 235,000 jobs in October, according to Bloomberg survey of economists, though market expectations are running slightly ahead of that after a private payrolls report earlier this week beat forecasts. Signs of strength in the US labour market add to optimism the Federal Reserve will hike interest rates next year, which has been driving demand for the greenback in recent months, and pushed it to a four-year high this week.

"Payrolls could be a decent number, that's what the market thinks," said Imre Speizer, senior market strategist at Westpac Banking Corp in Auckland. "The US dollar has been on a tear, so a strong number is somewhat priced in, but there's always room for a surprise, and payrolls numbers anywhere in the world are notoriously hard to survey."

The kiwi fell 10 basis points late on Friday after headlines of a 6.9 magnitude earthquake off Papua New Guinea.

Westpac's Speizer said the kiwi dollar's downward trend is still intact, and he expects the local currency will fall to about 75 US cents by the end of the year.

The local currency rose to 61.92 euro cents from 61.51 cents yesterday after European Central Bank president Mario Draghi said the bank is prepared to take more policy action to stimulate the Eurozone economy, adding the bank’s asset-buying programme would be sizable.

The kiwi was little changed at 89.57 Australian cents from 89.61 cents yesterday, and fell to 88.39 yen from 88.54 yen. It rose to 48.44 British pence at 5pm in Wellington from 48.13 pence yesterday.


Paul McBeth
Sat, 08 Nov 2014
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NZ dollar heads for 1.5% weekly fall vs. greenback as US employment figures loom