Dollar jumps on news of strong job creation

The New Zealand dollar jumped yesterday as Statistics New Zealand figures painted a rosy picture of the jobs market.

The figures were significantly stronger than the market was expecting, and the kiwi jumped on the news. By midday yesterday the kiwi was trading about US0.5 cents higher than before the release, above US69c for the first time in more than a week.

Since the September 23 election, and especially since Winston Peters announced he would form a coalition with the Labour Party on October 19, the New Zealand dollar has been sinking.

While a weaker currency helps exporters and makes New Zealand a cheaper holiday destination for tourists, it makes imported goods more expensive.

On September 22 the kiwi was buying about US73.3c, but it dropped as low as US68.18c on October 27, matching May’s 16-month low.

Finance Minister Grant Robertson said the fall was typical of changes in government, predicting the market would soon realise the new coalition was about job creation.

Bank of New Zealand strategist Jason Wong said Peters’ coalition decision was ‘‘a defining moment’’ for the kiwi, with the currency tumbling on the announcement.

Then there was ‘‘another lurch down’’ after the coalition agreement ‘‘lacked detail’’.

He said the selling appeared to be overdone. ‘‘[I]t wouldn’t be surprising to see a recovery of sorts over the coming month.’’