NZ dollar rises above 73USc for first time in a month

The New Zealand dollar rose above 73USc for the first time in a month after stronger-than-expected labour market data stoked speculation a widely anticipated rate cut by the central bank next week will be the last for now.

The kiwi traded at 72.87USc, having earlier reached 73.09USc, from 72.20USc late yesterday. The trade-weighted index climbed to 78.21, having touched 78.33, from 77.63 yesterday.

The US dollar index was little changed after the Federal Reserve kept US interest rates unchanged as expected, by a vote of eight to two, saying it "preferred to wait" for evidence the economy is picking up as it wants. In New Zealand yesterday, figures showed employment grew 1.4% in the third quarter, outpacing the 0.5% gain expected by the market, while the unemployment rate fell to 4.9%, the first time it has been below 5% since December 2008. Wage inflation remained subdued, with an unchanged 0.4% increase in the quarter.

"On the strength of yesterday's domestic data releases the NZ dollar has been the strongest performing currency over the past 24 hours," analysts at HiFX said in a report. "In line with expectations, the Fed kept interest rates unchanged while signalling that they could still hike in December as the economy gathers momentum and inflation picks up."

Also helping boost sentiment for the kiwi, prices soared at the latest dairy auction, with the GDT price index climbing 11.4%. Rising prices were expected because of a drop off in volumes of milk powder on offer.

The kiwi climbed to 95.16Ac from 94.60Ac. It gained to 59.29 British pence from 58.97 pence and rose to 65.68 euro cents from 65.19 cents. It rose to 4.9226 yuan from 4.8813 yuan and gained to ¥75.37 from ¥74.87.

(BusinessDesk)

Jonathan Underhill
Thu, 03 Nov 2016

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NZ dollar rises above 73USc for first time in a month