NZ dollar reaches 8-year high vs. Australian dollar
NZ dollar reaches 8-year high vs. Australian dollar after jobs figures disappoint
By Paul McBeth
Jan. 16 (BusinessDesk) - The New Zealand dollar climbed to a new eight-year high against its trans-Tasman counterpart after disappointing Australian jobs figures underlined the divergence between the neighbouring economies.
The kiwi rose as high as 94.52 Australian cents, trading at 94.45 cents at 5pm in Wellington from 93.40 cents yesterday. It was little changed at 83.29 US cents at 5pm from 83.32 cents at 8am and 83.36 cents yesterday.
The number of Australian jobs dropped by 22,600 in December, falling short of an expected gain of 10,000 in the month, and fuelled concerns about the country’s slowing economy. The Reserve Bank of Australia cut interest rates by 50 basis points to 2.5 percent last year in preparation for the looming peak of the nation’s resources boom, while at the same time New Zealand’s central bank laid the groundwork to start hiking rates this year.
“It was a big shock to the market and does keep alive the theme of kiwi outperforming the Aussie,” said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. “There’s no reason why the kiwi can’t keep going – 95 would be quite a stretch in the near-term.”
Still, Westpac’s Speizer said the kiwi could reach parity with the Australian dollar by the end of the year. It isn’t Westpac’s house view, but the cross-rate has historically overshot fair value by 10 percent, which leaves open the possibility, he said.
The Dollar Index, a measure of the greenback against a basket of currencies, held on to gains in the local trading session, trading at 80.98 at 5pm in Wellington after US manufacturing figures the Federal Reserve’s Beige Book painted a better picture of the world’s biggest economy.
Traders were spooked by a weak December employment reading last week, which spurred fears the Fed might not pull back on its stimulus programme as quickly as anticipated.
The local currency rose to 87.33 yen at 5pm in Wellington from 87 yen yesterday, and was little changed at 61.12 euro cents from 61.13 cents yesterday. It edged up to 50.85 British pence from 50.76 pence yesterday. The trade-weighted index climbed to 79.09 from 78.87 yesterday.