The New Zealand dollar pared its loss after stronger-than-expected US labour data stoked optimism about the recovery of the US economy, which would let the Federal Reserve continue to trim its asset purchase programme, and as Chinese trade figures disappointed.
The kiwi rose to 84.61 US cents at 5pm in Wellington from 84.38 cents at 8am, and unchanged from 84.61 cents at the New York close on Friday. The trade-weighted index fell to 79.19 from 79.28 last week.
US employers added 175,000 jobs last month, ahead of the 149,000 new jobs predicted, as the harsh winter conditions didn't deter hiring as much as anticipated. That underpinned appetite for the greenback as investors expect the Fed to keep scaling back its quantitative easing programme, which has been debasing the US currency by increasing circulation. A sharp decline in Chinese exports also weighed on the kiwi.
"Hope for kiwi exporters stayed alive after the terrible Chinese trade balance and pretty good numbers out of the States," said Alex Hill, head of dealing at HiFX in Auckland. "If we get a string of good US data, we could provide the opportunity for that to become the flavour of the month" and break the kiwi out of its recent 2 US cents range, he said.
Traders are looking to this week's New Zealand Reserve Bank meeting on Thursday, when governor Graeme Wheeler is expected to embark on a round of higher interest rates.
