NZ dollar stumbles after weak employment data, Greek debt deal looms

By Paul McBeth

Feb. 9 (BusinessDesk) – The New Zealand dollar declined after government figures showed tepid jobs growth in the final three months of last year and sapped demand for the currency, amid mounting speculation Greece will finally cut a deal with its private creditors.

The kiwi slipped to 83.40 US cents from 83.53 cents this morning and 83.52 cents yesterday. It was little changed at 73.03 on the trade-weighted index from 73.12 yesterday.

Demand for the kiwi dollar dimmed after the household labour force survey showed a fall in labour market participation, full-time employment and total hours worked in the three months ended Dec. 31. Still, the headline unemployment rate fell more than expected to 6.3 percent, and the annual trend is one of gradual jobs recovery.

That comes as traders prepare for Greek policymakers to reach agreement with private bondholders. The Mediterranean nation is negotiating how deeply it needs to cut public spending and restructure its debt commitments which will be acceptable to the European Union and International Monetary Fund, who are bailing out Greece.

“I think (the Greek deal) is going to be done in the next 12 hours, and I wouldn’t be surprised if people buy the rumour and sell the fact with the market quite short on the euro,” where traders sell an asset in the expectation they can buy it back more cheaply, said Tim Kelleher, head of institutional FX sales at ASB Institutional. “It would be a brave man to call a top on the kiwi – there’s certainly no reason to sell it.”

China’s consumer price index today showed inflation in the world’s second biggest economy accelerated to an annual 4.5 percent in January, faster than market expectations and limiting room for monetary easing.

The European Central Bank and Bank of England review their respective monetary policies on Thursday in Europe. The English central bank is expected to renew its quantitative easing programme, while the market has priced in a cut of 14 basis points to the ECB’s 1 percent benchmark interest rate, giving it a 50/50 chance.

The New Zealand Debt Management Office sold $200 million of 12-year bonds at an average yield of 4.09 percent. The sale attracted 29 bids worth $415 million.

Kelleher said New Zealand is still attracting investors, and it will be hard to determine when market sentiment is going to sour.

The New Zealand dollar traded at 64.32 at 5pm from 64.38 yen yesterday, and was little changed at 77.35 Australian cents from 77.39 cents.

It slipped to 62.88 euro cents from 63.07 cents yesterday, and declined to 52.72 pence from 52.86 pence.

(BusinessDesk)

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