NZ dollar 'in limbo' ahead of US jobs data

The kiwi was little changed at 84.15 US cents at 8am in Wellington from 84.13 cents at 5pm yesterday.

The New Zealand dollar declined after trading in a narrow range overnight as investors await the release of key US jobs data which was delayed by a partial government shutdown.

The kiwi traded in a 64 basis point range overnight, slipping to 84.55 US cents at 8am in Wellington from 84.88 cents at the 5pm market close yesterday. The trade-weighted index dropped to 77.92 from 78.18 yesterday.

This month's US political standoff delayed the release of the jobs data for September which the Federal Reserve uses as a gauge of how the world's largest economy is tracking. Strength in the data may prompt speculation that the Fed could start tapering its quantitative easing programme this year although traders may look through a strong result on the expectation the economy has been hurt by the shutdown.

The New Zealand dollar "like most of its peers seems rather stuck in limbo as it awaits the postponed release of US payrolls data tonight," Kymberly Martin, a strategist at Bank of New Zealand, said in a note. "Any softness in the data could see the New Zealand dollar benefit from US dollar weakness, as QE 'tapering' expectations are pushed back further."

The US jobs report will be released tonight New Zealand time after being delayed since October 4. Non-farm payrolls probably grew by 180,000 in September, showing the economy was gaining momentum before the shutdown, according to polls by Reuters and Bloomberg. The jobless rate probably held at a four-year low of 7.3 per cent.

Economists in a Bloomberg News survey expect the first reduction in the Fed's bond purchase programme to be delayed until March after the shutdown slowed fourth-quarter growth and interrupted the flow of data.

Fed officials will pare the monthly pace of asset buying to US$70 billion from US$85 billion at their March 18-19 meeting, according to the Bloomberg survey. The bank is expected to reduce monthly purchases to a US$25 billion pace by July and end the programme at its October 2014 meeting.

The 16-day shutdown probably reduced US growth by 0.3 percentage point in the December quarter, according to the survey.

The New Zealand dollar slipped to 87.58 Australian cents from 87.83 cents yesterday and edged lower to 83.04 yen from 83.13 yen. The kiwi dropped to 61.84 euro cents from 62.07 cents yesterday and declined to 52.38 British pence from 52.52 pence.