NZ dollar falls on weak Aussie jobs numbers, poor China data

The kiwi was trading at 63.88 US cents at 5pm.

The New Zealand dollar was weaker, dragged lower by unexpectedly weak jobs numbers in Australia and a raft of soft Chinese data.

The kiwi was trading at 63.88 US cents at 5pm in Wellington from 64.06 cents at 8am. The trade-weighted index was at 70.75 points from 70.88.

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The Chinese data showed retail sales rose 7.2 per cent in October compared with the same month last year, below the 7.9 per cent increase economists had expected. Industrial output growth of 4.7 per cent in the month was also weaker than expected.

The Australia data showed that the economy shed a net 19,000 jobs in October, the biggest fall since September 2016, when economists had expected growth of 15,000 jobs.

That drove Australia's unemployment rate up a smidgeon from 5.2 per cent to 5.3 per cent.

China is the largest trading partner of both Australia and New Zealand while Australia is New Zealand's second-largest trading partner.

"That China data dump is quite a closely followed series and that was unequivocally weak," says Mark Johnson, private client manager at OMF.

"The interesting thing for me with the Australian data is it was weaker in every component and there was a nudge higher in unemployment," he says. The Reserve Bank of Australia "has a clear objective to get unemployment down."

The RBA is unlikely to react to a single month's data from what is an "enormously volatile" data series and, until this month, it had been surprising on the upside.

"This might just be an aberration but it's going in the opposite direction now."

The RBA has one more meeting this year on December 3 and its next meeting after that will be Feb. 4, ahead of the RBNZ's next monetary policy committee meeting on February 12.

On Wednesday, at its last MPC meeting, the RBNZ decided to hold its official cash rate steady at 1 per cent, although the minutes revealed it was very much a line-ball call.

Should the RBA, whose cash rate is currently at 0.75 per cent, cut again, that would increase the pressure on RBNZ to follow suit.

The New Zealand dollar was trading at 94.00 Australian cents from 93.76, at 49.74 British pence from 49.87, at 58.04 euro cents from 58.21, at 69.43 Japanese yen from 69.64 and at 4.4844 Chinese yuan from 4.4985.

The two-year swap rate edged down to a bid price of 1.1629 per cent from 1.1920 per cent yesterday while 10-year swaps fell to 1.5350 per cent from 1.6025 per cent.