The New Zealand dollar has rebounded from a fresh five-year low overnight after the US dollar weakened following disappointing US jobs data.
The kiwi touched 66.59 US cents overnight, and was trading at 67.26 cents at 8am in Wellington, from 67.03 cents at 5pm yesterday. The trade-weighted index advanced to70.59 from 70.31 yesterday.
The local currency was under pressure yesterday after further weakness in dairy prices prompted some economists to price in more interest rate cuts. However weaker-than-expected US jobs data pulled the greenback lower, bolstering the kiwi. US nonfarm payrolls rose 223,000 in June, missing expectations for a 233,000 gain, while the April and May data were revised lower. The US labour force participation rate fell to its weakest since October 1977 and hourly earnings undershot expectations.
"The US dollar fell sharply after the release of US labour market data, allowing the NZD/USD to regain some composure," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "This will allow the US Fed some breathing space, but does not necessarily preclude a September rate hike."
US markets are closed on Friday for the Independence Day holiday. Traders will keep an eye on the release of China's service PMI's for signs of how Asia's largest economy is tracking.
