NZ dollar advances after US employment report misses expectations
By Tina Morrison
Sept. 8 (BusinessDesk) - The New Zealand dollar advanced after a US employment report printed weaker than expected, reviving expectations the Federal Reserve may keep interest rates at record lows for longer.
The kiwi was at 83.12 US cents at 8am in Wellington, from 83.26 cents at the New York close and 82.84 cents at 5pm in Wellington on Friday. The trade-weighted index gained to 79.01 from 78.77 on Friday.
The US dollar index, which measures the greenback against a basket of currencies, slipped after the US non-farm payrolls report showed US employers added 142,000 jobs last month, missing expectations for 225,000 jobs in a Reuters poll of economists and the slowest pace this year. Data for the previous two months was also revised lower. That prompted concern about the pace of the US economic recovery and suggested the Federal Reserve Open Market Committee won't signal higher rates at its meeting this month.
"Friday's surprisingly weak non-farm payrolls report triggered a pullback in the currency but in light of its strong rally this (past) week, the decline was extremely modest," Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, said in a note. "The dollar is propped up by broader fundamental drivers that remain unchanged despite one month of weak job growth. When (Fed chair) Janet Yellen speaks after this month's FOMC meeting, she will most likely provide zero insight on the timing of rate rises, downplaying expectations for earlier tightening.
"While the dollar could experience a further correction in the coming week, we expect the decline to be shallow and short-lived as investors view it as an opportunity to buy at lower levels," BK's Lien said.
In New Zealand today, Statistics New Zealand publishes the second quarter survey of manufacturing at 10:45am. Chinese banks are closed for a mid-Autumn festival.
The kiwi jumped to 51.31 British pence from 50.78 pence on Friday ahead of a referendum on Scottish independence.
The New Zealand dollar was little changed at 88.71 Australian cents from 88.66 cents on Friday, advanced to 64.19 euro cents from 64.05 cents and was almost unchanged at 87.22 yen from 87.23 yen.