The New Zealand dollar edged closer to its record against the Australian dollar overnight after Australia's weaker than expected labour data yesterday highlighted the better performing New Zealand economy.
The kiwi touched 96.29 Australian cents this morning, its highest since reaching a post-float record of 96.52 cents on January 8. It was trading at 95.95 Australian cents at 8am in Wellington, from 95.79 cents at 5pm yesterday. The local currency touched a two-week high of 74.85 US cents, and was trading at 74.30 cents at 8am from 73.43 cents yesterday as the greenback weakened after US retail sales failed to meet expectations.
A report yesterday showed Australia's labour market was weaker than expected in January, with the unemployment rate increasing from 6.1 per cent to 6.4 per cent, the highest since 2002 and above New Zealand's 5.7 per cent rate. Traders are awaiting Australia Reserve Bank governor Glenn Stevens' testimony to parliament's economics committee today for insight into the future direction of interest rates, after the bank last week cut the benchmark to a record low. That contrasts with New Zealand where the central bank has said rates are likely to remain on hold for some time.
"Yesterday's report highlighted the contrasting labour market trends on either side of the Tasman, as the unemployment rate in New Zealand remains on a downtrend," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. "The market will now be eagerly eyeing the early-January highs on the cross. No doubt talk of parity will once again start to circulate. We remain sceptical this will occur though believe fundamentals now support the cross remaining in the mid-90s for much of the year ahead."
In New Zealand today, food price data for January is scheduled for release at 10:45am.
