Kiwi up on OCR hint and jobs data

  • 04/02/2016

The New Zealand dollar has traded near a month-high as stronger headline labour market data and signals from the Reserve Bank it won't rush to cut interest rates trumped weaker prices at this week's dairy auction.

The kiwi traded at US66.67 cents at 5pm today in Wellington, from US65.39c yesterday. Earlier it touched US66.97c.

The trade-weighted index gained to 72.63 from 71.99.

Unemployment unexpectedly fell to 5.3 percent in the fourth quarter and employment grew 0.9 percent, according to government figures this week.

Meanwhile, Reserve Bank governor Graeme Wheeler gave a speech in which he asserted that extremely low headline inflation wasn't on its own a guaranteed catalyst for an interest rate cut.

Those two events were enough to drive up the kiwi even after prices fell in the latest GlobalDairyTrade auction, including a 10.4 percent slump for whole milk powder.

"The dairy auction was negative but then we had two positive events -- much stronger than expected headline labour data and Wheeler's speech where he very clearly and strongly emphasised we shouldn't be reading too much into headline inflation outcomes," said Robert Rennie, chief currency strategist at Westpac Banking Corp.

"That sounds like a central banker reluctant to ease."

Today, the kiwi slipped to 92.73 Australian cents from A93.10c yesterday.

It advanced to 45.72 British pence from 45.37p, rose to 60.12 euro cents from 59.91c, and increased to 4.3845 yuan from 4.3025 yuan. It rose to 78.69 yen from from 78.25 yen.

The two-year swap rate was unchanged at 2.62 percent and 10-year swaps rose 3 basis points to 3.31 percent.