NZ dollar rises on strong US jobs news

Photo / Dean Purcell

The New Zealand dollar rose against the greenback after better-than-expected payroll numbers in the US bolstered investors' appetite for higher yielding, or riskier, assets.

The euro dropped 3 per cent after a press report said Greece was looking to exit the European Union.

On Friday in the US non-farm employment data showed the world's biggest economy added 244,000 jobs in April, beating the market forecasts of 185,000, while private hiring rose to 268,000, the biggest increase since early 2006.

The upbeat data helped soothe frayed investor sentiment, when concerns surrounding the US recovery triggered a correction on commodity and equity markets. That underpinned demand for growth-linked currencies such as the New Zealand and Australian dollars.

"It was a volatile night in markets, with strong payrolls data improving sentiment," said Alex Sinton, a senior dealer at ANZ New Zealand. "For now the overall thrust seems to be forward rather than reverse, in the hard data at least."

Europe's sovereign debt crisis was again in the spotlight, after a report by Germany's Der Speigel claimed Greece was considering exiting the European to cope with its mounting debt repayments.

As it stands, Greek two year notes trade with a yield of 20 per cent. The news, which was subsequently denied by Greek authorities, saw the euro fall to US$1.438 from US$1.482 previously.

"We're starting to see a switching in market focus back to European sovereign debt concerns, which would take some of the steam out kiwi," said Mike Jones, a market strategist with Bank of New Zealand. "I can't help but think there is further downside in the kiwi."

The kiwi recently traded at 79.10 US cents from 78.62 cents on Friday, and climbed to 68.12 on the trade-weighted index of major trading partners' currencies from 67.57. It was little changed at 73.70 Australian cents from 73.75 cents last week, and rose to 63.77 yen from 63.23 yen. It climbed to 54.95 euro cents from 54.20 cents on Friday, and rose to 48.30 pence from 48.02 pence previously.

The kiwi may trade between a range of 78.70 US cents and 7960 cents today, Jones said.