NZ dollar holds above 80 US as ECB bond action spurs equities
By Paul McBeth
Sept. 7 (BusinessDesk) - The New Zealand dollar held above 80 US cents after the European Central Bank's bond buying programme to build the region's financial stability spurred a rally in global equity markets, and ahead of US employment figures.
The kiwi rose to 80.26 US cents at 5pm in Wellington from 80.10 cents at 8am, up from 79.56 cents yesterday. The trade-weighted index gained to 72.08 from 71.62 yesterday and is fractionally lower on the week.
Stocks across Asia gained after ECB president Mario Draghi unveiled a plan for the central bank to buy a limitless amount of short dated government debt, maturing between one year and three years, stoking optimism the euro-zone will successfully muddle its way out of its sovereign debt crisis. Japan's Nikkei 225 index gained 2.1 percent in afternoon trading, while Hong Kong's Hang Seng Index was up 2.4 percent and Australia's S&P/ASX 200 Index rose 0.3 percent.
That came ahead of Friday's non-farm payrolls figures in the US, which are expected to show the world's biggest economy added 130,000 jobs last month and an unemployment rate at 8.3 percent. Traders are looking for signs of life in the US economy, as a more upbeat environment may stop Federal Reserve chairman Ben Bernanke from printing more money.
"There's a lot of expectation riding on the employment number, and if it disappoints it would have a large impact on the kiwi," said Mike Jones, currency strategist at Bank of New Zealand in Wellington. "A hundred and thirty thousand would probably be enough to stay the Fed's hand next week and we could see knee-jerk US dollar buying if we get a number north of 100,000."
Investors will keep an eye on a Chinese data dump on Sunday, including the August consumer price index, producer prices index, retail sales and industrial sales. The world's second-biggest economy has been slowing down faster than previously expected, and has wound back its demand for foreign resources, which has weighed on Australia in recent weeks. The kiwi rose to 5.0906 Chinese yuan from 5.0812 yuan yesterday
Australia reported a wider trade deficit in July of than forecast of A$556 million. Economists were picking a shortfall of A$300 million. The kiwi traded at 77.75 Australian cents from 77.87 cents yesterday.
The currency rose to 63.31 euro cents from 63.13 cents yesterday and gained to 50.34 pence from 50.06 pence. The kiwi climbed to 63.34 yen from 62.40 yen yesterday.