The New Zealand dollar was firm today ahead of the United States payrolls report.
The local currency galloped higher this week when strong economic data offshore and a better than expected Fonterra online milk powder auction outweighed the impact of the collapse of South Canterbury Finance.
On Thursday, data on
US housing and jobless claims quelled fears of a double dip recession and investors are now waiting to see if Friday's US non-farm payrolls report sheds any light on the debate.
The US labour market is forecast to have shed 100,000 jobs in August as the jobless rate crept higher to 9.6 per cent. A worse-than-expected outcome would knock risk sensitive currencies like the NZ dollar.
By 5pm today the NZ dollar was buying US71.40c, little changed from US71.44c at 8am and up slightly from US71.28c at 5pm yesterday.
BNZ today reflected that the NZ dollar suffered a swift fall from grace in August. After climbing to six-month highs of nearly US74c in late July, it skidded back to around US70c.
"Not only did uncertainty about the global outlook knock some steam out of investors' risk appetite, but support for the NZ dollar from the domestic economy began to fade," BNZ said.
But the local currency is not about to collapse because as long as the New Zealand economy grows at a faster pace than the US economy the downside of the NZ dollar is limited.
Against the Australian dollar, the NZ dollar was at A78.58c from A78.37c at 8am and A78.61c at 5pm yesterday.
It was at 0.5566 euro at 5pm from 0.5572 yesterday and at 60.12 yen from 59.99 yen.
The trade weighted index was 66.45 at 5pm from 66.38 yesterday.
- NZPA
