The dollar went full circle in volatile trade yesterday, finishing back near its open after initial gains on better-than-expected employment data faded.
It closed slightly up at 39.58USc having traded in a more than one US cent range with a high at 40USc.
"The kiwi ran into a wall around 40USc," a currency dealer said.
People were initially positive as the September quarter Household Labour Force Survey showed unemployment below 6 per cent for the first time in 12 years - to a seasonally adjusted 5.9 per cent from 6 per cent in the June quarter.
Economists had expected the figure would be up to 6.5 per cent.
Employment grew, rising 1.2 per cent in the quarter to 1.784 million, an increase of 2.1 per cent on last year. Even better, most of the new jobs were full time.
But the dealer said the market was perplexed, as the good data did not mesh with a raft of dismal business and consumer confidence surveys.
So at second glance people were sceptical about how positive the data was for economic growth, and most had decided to wait for more information before trading on a view.
The numbers came shortly after Bank of New Zealand radically reviewed its growth and inflation forecasts, picking an easing in interest rates by the first quarter next year.
The majority expectation of an increase at that time is supported by today's data.
- NZPA
<i>Currency:</i> Dollar circles in volatile trade
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