KEY POINTS:
The New Zealand dollar closed unchanged today after a brief spike up on stronger than anticipated jobs data.
The official unemployment rate of 3.6 percent came in below forecasts of 3.8 percent from the Reserve Bank and economists polled by Reuters.
The number of new jobs increased in the second quarter by 0.7 percent, well ahead of the 0.3 percent economists' forecast.
The news briefly sent the kiwi up over US77c but after the initial flurry, it settled back to close on its opening level of US76.80c. That was still well above yesterday's US76.12c close.
BNZ currency strategist Danica Hampton said the figures showed not only was the labour market tight, it was getting tighter.
She said the message was that, despite a statement apparently to the contrary, it was premature to conclude the Reserve Bank had finished its tightening cycle.
However, BNZ does not expect the kiwi to get fresh wings.
"We think the New Zealand economy is slowing, growth is moderating. Provided that pans out, we think that the currency will fall."
An increase in the appetite for risk on world currency markets, encouraged by stronger equities markets, saw the New Zealand dollar push higher overnight to be around week highs against the greenback and yen.
The yen fell broadly after a US Federal Reserve statement tempered fears about the impact of ongoing US credit troubles on the broad economy, boosting stocks and other risky assets.
At the same time the US dollar declined against other major currencies because Tuesday's Fed statement gave no indication of any near-term interest rate action, contrasting with central banks in Europe which have signalled rate rises this year.
The kiwi lost a little ground against the aussie dollar, ending on A88.75c from A88.81c yesterday, despite the Reserve Bank of Australia's decision yesterday to raise interest rates by a quarter percentage point to a decade-high 6.5 percent. Australia also had strong employment data today.
Australian data showed jobs growth picking up in July and the unemployment rate holding near a 33-year low, stirring speculation rates may need to rise further.
Stephen Halmarick, co-head of market economics at Citigroup in Sydney, said the employment figures supported the RBA's rates decision and showed the labour market "remains very tight".
The Australian and New Zealand dollars -- long the favourites in the carry trade and favoured by Japanese investors seeking higher yields -- have rebounded nearly 4 percent from two-month lows struck against the yen last week.
The trade weighted index closed on 73.40 compared to 72.83 at 4.45pm yesterday.
Rates:
4.45pm today 4.45pm yesterday
NZ dlr/US dlr US76.80c US76.12c
NZ dlr/Aust dlr A88.75c A88.81c
NZ dlr/euro 0.5562 0.5528
NZ dlr/yen 91.86 90.37
NZ dlr/stg 37.69p 37.59p
NZ TWI 73.40 72.83
Australian dollar US86.50c US85.55c
Euro/US dollar 1.3806 1.3752
US dollar/yen 119.61 118.87
- NZPA