The New Zealand dollar jumped to its highest in almost five weeks against the Australian dollar, edging closer to its post-float high, as investors favour the outlook for the stronger New Zealand economy ahead of a report which may show the Australian labour market weakened last month.
The kiwi touched 95.81 Australian cents this morning, close to its January 8 post-float record of 96.52 cents, and was trading at 95.74 cents at 8am in Wellington, from 95.50 cents at 5pm yesterday. The local currency slipped to 73.90 US cents from 74.21 cents yesterday.
While the Reserve Bank of Australia followed many others around the globe by cutting interest rates last week, New Zealand's central bank has said the local benchmark is likely to remain on hold for some time. That's lured investors to the higher yielding kiwi currency. The Australian economy has been hard hit by falling commodity prices, particularly iron ore, and economists expect the country's January unemployment rate may increase to 6.2 per cent in a report today.
"The kiwi has been edging up, which is probably no surprise given the move by the RBA last week. It is just that hunt for yield," said Tim Kelleher, ASB Bank head of institutional FX sales in New Zealand.
"Ahead of Aussie jobs data today, it's hard to see it selling off," Kelleher said. "The Australian economy does appear to be in decline. If the Aussie jobs are weak it is certainly going to push higher again."
