The New Zealand dollar fell ahead of today's employment data, amid speculation the jobless rate crept up in the December quarter, while American private payrolls gained for a second month.
Economists predict New Zealand's unemployment rate was 6.4 per cent in the three months through to December 31, according toa Reuters survey, though there's potential for this to exceed forecasts after weak leading data earlier this week.
Investors' appetite for higher-yielding, or riskier, assets was muted in Northern Hemisphere trading after US private payrolls data beat expectations, stoking an increase in forecasts for Friday's non-farm payrolls data.
The kiwi dollar has been supported in recent months as rising food prices underpin demand for commodity-linked currencies, and dairy prices extended gains in Fonterra's online auction yesterday.
"The US dollar's been struggling to rally, even though US data is pretty good - we'll see whether the pay-rolls will be the catalyst for a turnaround," said Khoon Goh, head of market economics and strategy at ANZ New Zealand. "The unemployment number is expected to be weaker, which will weigh on the kiwi this morning."
The kiwi fell to 77.83 US cents from 77.97 cents yesterday, and was little changed at 68.92 on the trade-weighted index of major trading partners' currencies from 68.89. It recently traded at 63.59 yen from 63.56 yen yesterday, and gained to 77.34 Australian cents from 77.05 cents. It increased to 56.49 euro cents from 56.33 cents, and was little changed at 48.20 pence from 48.26 pence.
Goh said the currency may trade between 77.75 US cents and 78.25 cents today, though if the unemployment rate "is a real shocker, that downside is going to get blown away."
The Australian dollar fell 0.5 per cent to US1.0061 as Cyclone Yasi bears down on Queensland, just a month after the state was ravaged by major flooding, though the kiwi avoided being tainted by its trans-Tasman neighbour.
Rating agency Standard & Poor's downgraded Ireland's sovereign credit rating to A-, saying the nation still faces uncertainty over the amount of capital needed to secure its financial sector.
That comes ahead of the European Central Bank's meeting today in Europe, with expectations President Jean-Claude Trichet will take a tougher line on inflation.
