Kiwi dollar edges higher in tight range

The New Zealand dollar was slightly higher but stuck to a very tight range ahead of US jobs data due overnight.

The kiwi was trading unchanged at US67.58c at 5pm yesterday compared with

8am. It fell about 0.6 per cent over the week. The trade weighted index was at 73.60 points from 73.55.

“The kiwi really struggled in the early hours and that was really just a US dollar strength story,” said Mike Shirley, senior dealer at Kiwibank.

However, it bounced off a key technical support level of US67.45c and got further impetus from some positive New Zealand data, with building activity rising in the December quarter, and a better-than-expected economic survey of manufacturing.

“The market is really just drifting along without its hand on the wheel, waiting for the next thing and that is probably going to be the non-farm payrolls number,” Shirley said.

Given the low unemployment rate, any sign of wage inflation could spur a market reaction, said Shirley.

“Good employees are harder to find. You have to pay more to get them, so it increases wages, which has a flow-on effect for inflation, which maybe then spurs the Federal Reserve to do something,” he said.

The kiwi was trading at 60.34 euro cents from 60.24 at 8am. It was at 51.61 British pence from 51.60, 75.27 yen from 75.38 and at 4.5398 Chinese yuan from 4.5375. It was at A96.35c from A96.20c.

The two-year swap rate ended the day at

1.8135 per cent from 1.8294 on Thursday and the 10-year was at 2.3725 per cent from

2.4150.