NZ dollar extends slide after Reserve Bank confirms intervention, jobs data looms
By Tina Morrison
May 9 (BusinessDesk) -The New Zealand dollar extended its slide after the central bank yesterday said it had sold the currency to limit rallies, and ahead of employment figures today.
The kiwi fell to 83.87 US cents from 83.97 cents at 5pm yesterday, after dropping as low as 83.62 following the Reserve Bank confirming its currency intervention. The trade-weighted index dropped to 77.5 from 77.66.
Central bank governor Graeme Wheeler told politicians the bank had intervened in currency markets by an undisclosed amount to "potentially take the tops off rallies".
The currency "has still got a cloud over it from the Reserve Bank's comments yesterday on intervention," said Peter Cavanagh, senior client advisor at Bancorp Treasury. "It will have a flow on effect from that today."
However, New Zealand "still ticks a number of boxes for investors" and the slide is likely to be limited, Cavanagh said.
Traders will be looking to employment reports today for signs of economic expansion. Government figures are expected to show the nation's jobless number fell to 6.8 percent in the first quarter from 6.9 percent, according to a Reuters survey of 12 economists. Employment is forecast to rise 0.8 percent after dropping 1 percent in the previous three months.
"Outside of Christchurch, employment is struggling, particularly in the tradable sector," Cavanagh said. "That's one reason the Reserve Bank has come up with the comments and actions it has."
Solid Energy yesterday announced it was halving it corporate workforce, having already shed 400 jobs with the mothballing of the Spring Creek mine.
The kiwi gained to 82.49 Australian cents, from 82.43 cents yesterday. It fell to 63.78 euro from 64.13 euro, it dropped to 83.04 yen from 83.126, and is down to 54.01 British pence from 54.28 pence yesterday.