NZ dollar falls to two-week low as greenback rallies

Photo / Dean Purcell

The New Zealand dollar fell to a two-week low against the greenback after figures showed lower-than-expected US unemployment, pushing US Treasury yields to a nine-month high.

The yield on 10-year US Treasury notes rose to 3.64 per cent, the highest level since May last year, after US unemployment fell 0.4 percentage points to 9 per cent, even as the world's biggest economy added a smaller-than-expected 36,000 jobs last month.

Though US non-farm payrolls came in short of expectations, the Dollar Index, a measure of the greenback against a basket of currencies, rose 0.4 per cent to 78.04. The employment data follows strong manufacturing figures last week, adding to the optimistic outlook for the US economic recovery.

"The US did like the payrolls number, and Treasury yields rose significantly - that pushed up the US dollar, and everything else fell to some degree," said Imre Speizer, market strategist at Westpac Bank "Positive US data is now becoming more correlated with a positive US dollar, and the outcome of that would mean our currency would struggle."

The kiwi dropped to 76.81 US cents from 77.22 cents on Friday in New York, and was little changed from 68.36 on the trade-weighted index of major trading partners from 68.42.

It rose to 63.18 yen from 63 yen last week, and recently traded at 75.90 Australian cents from 75.81 cents. It was little changed at 56.68 euro cents from 56.63 cents on Friday, and slipped to 47.73 pence from 47.85 pence.

Speizer said the kiwi may trade between 76.50 US cents and 77.50 cents today with Australian retail sales data the major event for the data. With little local data on the horizon this week, the kiwi will follow market sentiment, he said.