NZ dollar little changed as greenback boosted

File photo / NZ Herald

The New Zealand dollar was little changed in local trading after stronger than expected US employment figures stoked demand for the greenback on a growing expectation the Federal Reserve will have to hike interest rates.

The kiwi traded at 77.67 US cents at 5pm in Wellington from 77.65 cents at 8am, and 77.62 cents at the close of trading in New York on Friday. The trade-weighted index fell to 76.21 from 76.68 last week.

The greenback held gains in the Asia-Pacific session, after Labor Department figures on Friday showed the US added 248,000 jobs in September, pushing the unemployment rate to a six-year low of 5.9 percent.

That beat market expectations for 215,000 jobs to be added in the month and a jobless rate of 6.1 percent. Minutes to the Federal Reserve's September meeting and a slew of central bank speakers will be closely watched by the market this week.

"The payrolls number justified the US dollar strength, but doesn't justify the kiwi to break down through 77 US cents," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "There's no reason for the kiwi to rally too much but it does suggest this week will be a bit of a pause for breath and consolidation on the trend."

ANZ's Tuck said reports that Sri Lanka had suspended the sale of some New Zealand dairy products prompted a brief dip in the kiwi dollar earlier today, though when the small size of the halt became apparent, markets corrected the move.

Quotable Value figures today showed New Zealand property values continued to rise at a slower annual pace in September, with a pause in interest rates, the re-election of the incumbent National-led government and new spring listings renewing some interest in the market. Tomorrow's quarterly survey of business opinion from the New Zealand Institute of Economic Research will be watched to gauge firms' sentiment about the economy.

There were no changes to key economic portfolios when Prime Minister John Key announced his third term Cabinet line-up, with Finance Minister Bill English entrenched in the position.

The kiwi fell to 89.32 Australian cents at 5pm in Wellington from 89.45 cents on Friday in New York ahead of tomorrow's Reserve Bank of Australia policy review, which is expected to keep the target cash rate unchanged at 2.5 percent.

The local currency traded at 85.13 yen from 85.19 yen last week, and was little changed at 62.04 euro cents from 62.01 cents. It was almost unchanged at 48.60 British pence from 48.61 pence on Friday in New York.