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NZ Dollar Falls On Employment Data And Bollard Comments

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Nov 5 NZPA - The New Zealand dollar took a step lower today on disappointing employment data, then another step down on comments by Reserve Bank governor Alan Bollard.

By 5pm the NZ dollar was at US71.89c from US72.63c at 8am and US71.92c at 5pm yesterday. It fell to A79.34c at 5pm from A79.84c at 8am and A79.73c at 5pm yesterday.

New Zealand's unemployment rate rose to a nine-year high of 6.5 percent in the September quarter and employment fell 0.8 percent, which was worse than the 0.3 percent median fall prediction in a Reuters poll of economists.

"It was a bit weaker employment report than expected. That sold the kiwi off and aussie didn't move," said Westpac currency strategist Imre Speizer.

"Then Bollard gave it another nudge," he said.

Slightly better than expected Australian trade data also kept the Australian dollar firm.

Dr Bollard issued a warning to foreign exchange markets today, saying they did not appear to appreciate the differences between the New Zealand and Australian economies and would eventually lose money because of it.

Australia's prospects are driven by strong terms of trade, vast mineral deposits, the Chinese market, and rapid population growth, while the pick-up in New Zealand was slower and more vulnerable.

Earlier, the United States Federal Reserve held rock-bottom interest rates for "an extended period" and kept stimulus measures in place to support a fragile recovery from recession.

The focus is now turning to a Reserve Bank of Australia monetary policy statement tomorrow and a Fonterra forecast payout update next week.

The NZ dollar was little changed at 64.98 yen from 64.89 yen yesterday. It was 0.4845 euro from 0.4883 yesterday.

The trade weighted index fell to 64.64 at 5pm from 64.86 yesterday.

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