Strong jobs data boosts Kiwi dollar

The New Zealand dollar is heading for a 0.7 per cent weekly gain against the greenback as strong domestic jobs figures bolstered the local outlook and as traders questioned whether proposed US tax cuts will go ahead and rates will rise as fast as previously expected.

The kiwi traded at US69.20c at 5pm yesterday from US69.22c on Thursday, and up from US68.79c last Friday in New York. The tradeweighted index was 73.39 from 73.22 on Thursday.

The US dollar fell through the week on news that dovish candidate Jerome Powell will chair the Federal Reserve and on concerns that US President Donald Trump will struggle to pass tax cuts. The kiwi was buoyed by better than expected jobs data, but ANZ Bank New Zealand chief economist Cameron Bagrie said the currency was now “moving sideways”.

Bagrie said he expected the kiwi to stay under pressure due to political uncertainty, and after the fall in business confidence “we will be watching next month’s numbers with a lot of attention because if we start to see weakness in business confidence transfer into broader economic indicators, that will be currency negative”.

This week’s ANZ Business Outlook survey showed business confidence fell to a net 10 per cent of firms negative about the year ahead.

Looking ahead to next Thursday’s monetary policy review by the Reserve Bank, Bagrie said he expected rates to stay on hold. The kiwi climbed to 52.95p from 52.10p late on Thursday. It was at €59.37c from €59.38c.

The local currency rose to A90.04c from A89.59c on Thursday after weaker-thanexpected retail sales across the Tasman. It increased to 4.5815 yuan from 4.5664 yuan, and edged up to ¥78.92 from ¥78.80 on Thursday. New Zealand’s two-year swap rate was unchanged at 2.15 per cent and 10-year swaps fell 4 basis points to 3.10 per cent.